(Reuters) - Prudential Financial Inc is set to buy online insurance startup Assurance IQ Inc for $2.35 billion, the latest in a series of moves by traditional insurers to up investment in technology and data crunching by buying Silicon Valley startups.

Shares of Prudential, which have struggled in the year since Charles Lowrey took over as chief executive officer, rose 3% in morning trade on the news of the deal. They fell 21% in August after poorer-than-expected quarterly results.

Labelled “insuretech”, Assurance and peers such as California-based Health IQ and Clover Health have drawn eyes over the past year with disruptive models that use data crunching and artificial intelligence to boost revenue and cut costs.

Andrew Sullivan, who heads Prudential’s retirement and group insurance businesses, said in a call with analysts that Assurance brought with it 17 million customers in need of insurance.

“We know that there are large middle market and mass affluent customer segments that have been traditionally underserved.”

Assurance will add a new earning stream to Prudential that is not sensitive to equity markets, interest rates and credit, he said.

The deal is part of a broader trend of large insurers increasingly betting big on new-age, Silicon Valley startups that are starting to disrupt the traditional insurance space.

Marquee tech investors SoftBank Group Corp and Andreessen Horowitz have poured large amounts of capital into insuretech over the past 12-18 months, expecting valuations to surge as interest from the sector’s big players grows.

Health IQ, which started selling policies in 2016, raised $55 million from Andreessen Horowitz and other investors earlier this year, valuing it at $450 million.

Assurance uses data science and machine learning to speed up the application process and sells health, life, Medigap, home, and auto policies from more than 20 providers.

“The consumer wants to be met not through a financial advisor but online through a portal,” said Sandler O’Neill analyst John Barnidge in a note.

Assurance will continue to operate as a wholly owned subsidiary of Prudential under existing CEO Michael Rowell and the deal value will rise by another $1.15 billion in additional cash and equity based on growth targets. (reut.rs/2kwiqNd)

Prudential expects the deal to generate cost savings of $25 million to $50 million in 2020, and $50 million to $100 million by 2022, adding 10 cents per share to the company’s earnings by 2020, and between 30 cents and 35 cents in 2021.

It plans to use a combination of cash, debt, and equity financing to fund the deal, expected to close in the fourth quarter. In a separate announcement, Prudential said it was increasing the company’s share repurchase authorization for 2019 by $500 million to $2.5 billion.