Aetna to Acquire Medicare Supplement Business of Genworth Financial
June 13 2011 - 8:30AM
Business Wire
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.
About Aetna
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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