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The Hartford to acquire Aetna’s U.S. group life & disability business for $1.45bn

25th October 2017 - Author: Luke Gallin

The Hartford has announced that it will acquire Aetna’s U.S. group life and disability business for $1.45 billion, in cash, subject to state regulatory approvals and other customary closing conditions.

mergers and acquisitions reinsuranceThe deal will see The Hartford become the second largest group life and disability insurance company, with roughly $5 billion in expected earned premium.

The Hartford says the takeover will accelerate its strategies for distribution, digital capabilities and claim outcomes, while further accelerating its technology strategy.

The Hartford’s Chairman and Chief Executive Officer (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.”

For Aetna, the transaction allows the firm to focus on core businesses and strategy, and the company has a number of options for the use of the proceeds.

Aetna President, Karen S. Lynch, commented; “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.”

A statement on the acquisition explains that the majority of the Aetna Group Insurance employees across the country that support the acquired unit, will transfer to The Hartford, with the two companies working together to support mutual clients.

President of The Hartford, 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.”

As part of the deal, The Hartford also acquires industry-leading digital assets, as well as an integrated absence management platform and, via a multi-year partnership, Aetna will be offering The Hartford’s group life and disability solutions through Aetna’s medical sales team.

“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,” said Elliot.

The deal is expected to close in early November, 2017, for a cash consideration of $1.45 billion. Furthermore, Hartford Life & Accident will reinsure Aetna’s book of group life and disability insurance, on an indemnity basis, which had premiums of around $2 billion in 2016.

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