8-K: Reliance Global Sells Non-Core Unit, Boosts Balance Sheet

Reliance Global Group completed the strategic sale of its EBS/USBA business unit for $1.05 million, aiming to reduce debt and reinvest in core InsurTech platforms.

Summary

• Reliance Global Group, Inc. (the Company) sold substantially all assets of its wholly-owned subsidiaries, Employee Benefits Solutions, LLC and US Benefits Alliance, LLC (collectively, the Seller), to Employee Benefit Solutions Inc (the Purchaser).
• The Asset Purchase Agreement was dated December 23, 2025, with an effective date of November 30, 2025, and the transaction closed on December 24, 2025.
• The Purchaser paid $1,050,000 in cash for the assets, which include insurance brokerage rights, client information, goodwill, a leasehold interest, assignable governmental licenses, restrictive covenants, and certain furniture, fixtures, equipment, and intellectual property (excluding RELI Exchange Marks).
• The Company plans to use 50% of the net proceeds from the sale to reduce debt and reinvest the remaining balance in strategic business initiatives, specifically its core InsurTech platforms, RELI Exchange and 5minuteinsure.com.
• The transaction is part of a broader strategy to streamline the Company's portfolio, focus capital on high-return opportunities, and enhance financial flexibility.
• The agreement includes mutual restrictive covenants, such as non-solicitation clauses for clients and employees, for a period of five years following the effective date.

Sentiment

Score: 8

Explanation: The filing conveys a strong positive sentiment, emphasizing strategic focus, significant debt reduction, and reinvestment in core growth areas. Management commentary is optimistic about future returns and competitive positioning.

Positives

• The Company successfully divested non-core assets, allowing for a more focused strategic direction on its InsurTech platforms.
• The transaction contributes to a significant reduction in long-term debt, with approximately $6 million (over 50%) reduced during 2025, including proceeds from this sale.
• Reinvestment of remaining proceeds into core platforms (RELI Exchange and 5minuteinsure.com) is anticipated to drive greater scaling and enhance competitive position.
• Strengthening of the balance sheet increases investment capacity and the ability to pursue higher-return opportunities.

Risks

• Ability to successfully execute the strategy to streamline the portfolio and focus on core, technology-forward platforms.
• Realization of the anticipated strategic, operational, and financial benefits of the EBS divestiture.
• Possibility of unanticipated costs, liabilities, or disruptions associated with the transaction, including impact on remaining operations, employees, customers, or business partners.
• Net proceeds from the transaction may be reduced or delayed due to transaction expenses, post-closing purchase price adjustments, escrow/holdback amounts, or indemnification claims.
• Ability to successfully reduce debt and improve leverage and overall financial flexibility as anticipated.
• Ability to grow RELI Exchange and 5minuteinsure.com, attract and retain agents and customers, and achieve expected levels of adoption and profitability.
• Ability to effectively deploy capital into business development or other strategic initiatives.
• Ability to maintain adequate liquidity and access to capital, including any issuance under the at-the-market equity offering program.
• Competitive pressures within the InsurTech and insurance agency/brokerage industries.
• General business, economic, market, interest rate, and geopolitical conditions.

Future Outlook

The Company anticipates that the strategic sale will enhance its ability to execute new initiatives by focusing capital and efforts on core, technology-forward platforms like RELI Exchange and 5minuteinsure.com. Management expects greater scaling and an enhancement in its competitive position, along with improved financial flexibility and increased investment capacity to pursue higher-return opportunities.

Management Comments

• Ezra Beyman, CEO: "Successfully completing this transaction is an important step in our overall strategy to focus capital and efforts toward the areas that the Company has identified to potentially produce the best return on investment. The result, which is a strengthening of our balance sheet, increases our investment capacity and ability to act on higher return opportunities that present themselves to the Company."
• Joel Markovits, CFO: "Combined with the debt reduction from this transaction, during 2025, weve been able to reduce our long-term debt by approximately $6 million, or more than 50%, and with the balance of the proceeds after debt reduction going toward reinvestment in our core platforms, RELI Exchange and 5minuteinsure.com, the Company anticipates greater scaling and an enhancement in our competitive position."

Industry Context

This announcement reflects a broader industry trend among InsurTech companies to streamline operations and focus on core technological strengths. Reliance Global Group is leveraging AI and cloud-based technologies to transform the insurance agency/brokerage industry, and this divestiture allows it to concentrate resources on its B2B (RELI Exchange) and B2C (5minuteinsure.com) platforms, aligning with the push for digital transformation and efficiency in insurance.

Stakeholder Impact

• Shareholders: Expected to benefit from a strengthened balance sheet, reduced debt, and increased focus on potentially higher-return core businesses, which could lead to improved long-term value.
• Employees: Some employees of the Seller may be offered employment by the Purchaser, while others may be impacted by the divestiture.
• Customers: Client policies and accounts are being transferred to the Purchaser, ensuring continuity of service for the acquired business segment.
• Creditors: Benefit from the Company's debt reduction efforts, improving its financial stability.

Next Steps

• The parties will prepare and agree upon a monthly reconciliation schedule to account for entitlement payments and expenses until no further material activity exists.
• Seller will file a Request for Tax Clearance Application with the Michigan Department of Treasury and provide the certificate to the Buyer.
• Seller will provide evidence of prepaid error and omission tail coverage for three years commencing with the Effective Date.
• Seller will deliver evidence of termination of any qualified retirement plan within 30 days after the Agreement Date.
• The parties will cooperate to obtain a written termination of the Lease for the Cadillac, Michigan property within 30 days after the Agreement Date.
• Purchaser may offer employment to some or all of the Seller's employees, with a list of hiring intentions provided five business days prior to closing.

Key Dates

Recommendation

The strategic divestiture of non-core assets, coupled with a substantial reduction in long-term debt and a clear plan for reinvestment into high-growth InsurTech platforms, positions Reliance Global Group for improved financial health and future growth. This move enhances the Company's focus and operational efficiency, making it a compelling 'buy' for investors looking for long-term value in the InsurTech sector.

Keywords

InsurTech, Asset Sale, Debt Reduction, Strategic Divestment, Insurance Brokerage, RELI Exchange, 5minuteinsure.com, Corporate Strategy, Balance Sheet Rationalization