Insurance group Hartford Financial Services Group Inc (NYSE:HIG) is to buy the US life and disability business of sector peer Aetna Inc (NYSE:AET).
Hartford is paying US$1.45bn in cash for the business.
“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,” said Hartford’s chairman and chief executive officer, Christopher Swift.
“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,” he added.
The acquisition is expected to enhance Hartford’s earnings per share in 2018 but the market reacted negatively to the outlay of US$1.45bn; the shares were down 3% at US$54.80 in pre-market trade.
Aetna’s shares were unchanged.
“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,” said Aetna president Karen Lynch.