AET Aetna Inc. (delisted)

Genworth Financial Inc. (GNW) has inked a deal with Aetna Inc. (AET) to sell its Medicare supplement business and related blocks of in-force business for $290 million. The transaction is expected to close in the fourth quarter of 2011 pending regulatory approvals and closing conditions.

Genworth estimates approximately $240 million will be available for utilization within its life insurance companies from the transaction. The company also expects to record an after-tax gain of approximately $35 million from the sale.

The deal includes the sale of Continental Life Insurance Company of Brentwood, Tennessee and its subsidiary, American Continental Insurance Company. Also, the agreement entails reinsurance deals between some Genworth life insurance arms and Aetna to move the divested Medicare supplement in-force business.

With the divestment of the Medicare supplement business, Genworth will now focus more on its Retirement and Protection segment.

Aetna, which has about 10,000 Medicare supplement customers and will add roughly 145,000 members with its acquisition of Continental Life Insurance Company of Brentwood. The purchase will also broaden Aetna’s presence in the U.S. government program for the elderly.

Last week, WellPoint Inc. (WLP) agreed to purchase privately held Medicare specialist CareMore Health Group for $800 million, in order to expand its presence in the U.S. government program for the elderly. The deal expected that the deal will not impact the profits of 2012, but will add to earnings in 2013 and beyond.

Genworth reported first quarter earnings of 20 cents, lagging the Zacks Consensus estimate by a penny. The Zacks Consensus Estimates for second-quarter 2011 is 25 cents per share. For full years 2011 and 2012, the Zacks Consensus Estimates are, respectively, $1.03 and $1.67 per share.

The quantitative Zacks #3 Rank (short-term Hold rating) for Genworth indicates no clear directional pressure on the shares over the near term.

Based in Hartford, Connecticut, Aetna Inc. provides healthcare, dental, pharmacy, group life, disability, and long-term care benefits to approximately 35.8 million people in the U.S.

Based in Richmond, Virginia, Genworth Financial offers a variety of products to customers in areas such as life insurance and lifestyle protection, long-term care insurance, annuities, asset management and mortgage insurance through financial intermediaries, advisors, independent distributors and sales specialists.

 
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