Hartford acquires Aetna’s US Group Life and Disability for $1.45bn
Aetna in November 2017 sold its group life and disability insurance and absence management business to The Hartford for $1.45bn.
Life and disability was the only non-health insurance related part of the business remaining after Aetna cut its property casualty insurance business in the mid-1990s. It only brought in about $2bn in premiums in 2016, while Aetna recorded $63.1bn in total revenue, and healthcare premium revenues reached $54.1bn.
The acquisition deepens and enhances The Hartford’s benefits distribution capabilities and accelerates the company’s technology strategy. The company also obtained industry-leading digital assets and an integrated absence management platform meant to enhance customer experience. In addition, the deal enhances its 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.
The Hartford has paid Aetna a cash consideration of $1.45 billion, primarily comprised of a ceding commission 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.
Aetna has several options for use of the proceeds of the transaction, included but not limited to internal investments to enhance the company’s customer experience, share repurchases and repayment of debt.