Leading provider of Medicare Supplement insurance
HARTFORD, Conn. – Aetna (NYSE: AET) today announced that it has entered into an agreement with Genworth Financial, Inc. to acquire Genworth’s Medicare Supplement business and related blocks of in-force business. Genworth is a leading provider of Medicare Supplement coverage. The business has more than 145,000 Medicare Supplement members. The transaction will substantially enhance Aetna’s presence and capabilities as a provider of Medicare Supplement insurance.
Aetna will acquire 100% of the stock of Continental Life Insurance Company of Brentwood, Tennessee (CLI), and reinsure certain related blocks of in-force business. The purchase price is approximately $290 million. Aetna expects to finance the acquisition with available resources.
“By acquiring this business, Aetna will significantly expand its footprint in the Medicare Supplement business,” said Mark T. Bertolini, Aetna’s chairman, CEO and president. “This important growth opportunity comes at a time when the Medicare population is anticipated to increase as ‘Baby Boomers’ reach age 65. Medicare Supplement is expected to be a fast-growing product in the coming years as individuals seek peace of mind for out-of-pocket costs and employers look for added retiree coverages.”
Joseph M. Zubretsky, senior executive vice president and CFO, added, “This acquisition is in keeping with Aetna’s plan to broaden its product portfolio and add new revenue streams, and address the increasing needs of the senior population. Aetna brings capabilities to grow the Medicare Supplement business, including access to commercial retirees and Medicare Prescription Drug Plan members, multi-channel distribution and other Aetna product offerings.”
The transaction will be treated as an asset purchase for tax purposes and is subject to customary closing conditions, including federal Hart-Scott-Rodino antitrust and state regulatory approvals. The transaction is expected to close during the fourth quarter of 2011, and is projected to be neutral to Aetna’s earnings in 2012 and modestly accretive thereafter.
Medicare Supplement products cover deductibles, co-pays and other expenses not covered under Medicare Parts A and B. CLI also offers ancillary products such as Accident & Health and Final Expense coverages. The business being acquired had approximately $317 million in net earned premium for 2010.
Aetna expects to maintain the business’ current management, staff and operations, which are primarily based in Brentwood, Tenn.
Aetna is one of the nation’s leading diversified health care benefits companies, serving approximately 33.8 million people with information and resources to help them make better informed decisions about their health care. Aetna offers a broad range of traditional, voluntary and consumer-directed health insurance products and related services, including medical, pharmacy, dental, behavioral health, group life and disability plans, and medical management capabilities and health care management services for Medicaid plans. Our customers include employer groups, individuals, college students, part-time and hourly workers, health plans, governmental units, government-sponsored plans, labor groups and expatriates. For more information, see www.aetna.com.
CAUTIONARY STATEMENT – Certain information in this press release is forward-looking, including but not limited to, the impact of the transaction on Aetna’s presence and capabilities as a provider of Medicare Supplement insurance, the expected future growth of sales of Medicare Supplement products, the projected timing of the closing of the transaction, the projected impact of the transaction on Aetna’s 2012 and future financial results, and the expected retention of Genworth’s personnel. Forward-looking information is based on management’s estimates, assumptions and projections, and is subject to significant uncertainties and other factors, many of which are beyond Aetna’s and Genworth’s control. Important risk factors could cause actual future results and other future events to differ materially from those currently estimated by management. Those risk factors include, but are not limited to: the ability to successfully develop and integrate the business operations described herein in a timely and cost-efficient manner (including obtaining the required regulatory approvals on a timely basis to close the transaction); the ability to realize projected revenue; the ability to retain current Genworth members and grow the membership base in the future; the impact of enhanced competition in the Medicare Supplement business; retention of key Genworth personnel; and adverse government regulation or review or enhanced government enforcement.
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