Aetna unloads group life and disability business for $1.45bn


Aetna unloads group life and disability business for $1.45bn

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The Hartford has entered into a definitive agreement to acquire health insurer Aetna's US group life and disability business for a cash consideration of $1.45 billion.

The acquisition enhances The Hartford’s group benefits distribution capabilities and accelerates the company’s technology strategy. It also enhances The Hartford’s distribution footprint and includes an exclusive, multi-year collaboration in which Aetna will be offering The Hartford’s group life and disability products through Aetna’s medical sales team.

According to the statement, Aetna has several options for use of the proceeds of the transaction, including but not limited to internal investments to enhance the company’s customer experience, share repurchases and repayment of debt. The deal will enable the health insurer to enhance focus on its core businesses and strategy.

Aetna president Karen Lynch said: "Our transaction with The Hartford will benefit both our shareholders and customers, allowing us to have a stronger focus on our strategy of creating a personalized approach to improving member health."

Aetna and The Hartford will work together to support their mutual customers. In addition, the majority of the Aetna Group Insurance employees across the country who support the acquired business will transfer to The Hartford.

The transaction is expected to close in early November 2017, subject to state regulatory approvals and other customary closing conditions.

The Hartford’s chairman and CEO Christopher Swift, said: "The transaction provides a unique and accretive opportunity for The Hartford to become the second largest group life and disability insurer, an important business for The Hartford with a stable risk profile, attractive returns and strong long-term growth prospects.

"The combination of these two businesses strengthens our position as a leader in the large employer market and increases our presence among midsize employer clients. It also creates new opportunities to distribute additional products to a customer base of more than 20 million people who will be insured by the combined business."

The Hartford’s president Doug Elliot added: "The transaction combines two franchises that are both committed to high-quality products, best-in-class customer and claims service, and strong distribution partnerships. We also welcome approximately 1,800 Aetna Group Insurance employees nationwide and place great value on the talent they will bring to our company.

"Our claims organization continues to use data and advanced analytics across workers’ compensation and disability to drive better outcomes for customers in both business lines. As the nation’s second largest workers’ compensation insurer, and now, the second largest group disability insurer, this transaction increases our competitive differentiation and potential for future product offerings for absence management."

The Hartford will pay Aetna cash consideration of $1.45 billion, primarily comprised of a ceding commission, to be paid by Hartford Life & Accident Insurance Company, the primary Group Benefits insurance operating subsidiary of The Hartford. Hartford Life & Accident will reinsure on an indemnity basis Aetna’s book of group life and disability insurance, which had premiums of approximately $2 billion in 2016.

The Hartford, Aetna, Acquisition, M&A, Life & Accident, Karen Lynch, Doug Elliot, Christopher Swift, US