Connecticut-based insurer Hartford Financial Services is paying $1.45bn to buy health insurer Aetna’s unit that provides life and disability income and other insurance products to employers' benefits programs.
The acquisition will nearly double the company's business of selling benefits to employers, one of its main operations outside of property-casualty insurance.
Hartford chairman and chief executive, Christopher Swift told Dow Jones that the acquisition "will make us one of the top-two players" in sales of the group-benefits products.
20 million insured
Dow Jones reported that Hartford's annual premium in the business will expand to about $5bn from $3.15bn in 2016, and there will be more than 20 million people insured by the combined operation.
Property-casualty insurance will remain Hartford's dominant business with more than $10.5bn in annual premium. Hartford also has a mutual-funds operation.
Hartford's rivals in group insurance include Lincoln National, MetLife, Prudential Financial and Unum Group.
The deal marks another sign of Hartford's turnaround from struggles during the 2008-09 global markets meltdown. It was among the hardest-hit insurers, when a long market-leading position in sales of a stock-market-linked retirement-income product proved riskier than anticipated. It took $3.4bn in US government aid, since repaid.
Stronger focus for Aetna
In a news release, Aetna president Karen Lynch said the divestiture allows "a stronger focus on our strategy of creating a personalised approach to improving member health." Aetna said options for deploying sales proceeds include internal investments, share repurchases and debt repayment.
Hartford doesn't intend to issue debt or equity to fund the purchase. It said it would use money allocated for share buybacks and said the transaction would add to its 2018 earnings.