- Acquisition makes The Hartford the second largest group life and disability insurer1 with approximately $5 billion in expected earned premium2
- Acquisition further accelerates The Hartford’s strategies for distribution, digital capabilities and claim outcomes
- Transaction allows Aetna to enhance focus on core businesses, strategy
The
Hartford has entered into a definitive agreement to acquire Aetna’s
U.S. group life and disability business for cash consideration of $1.45
billion. This acquisition deepens and enhances The Hartford’s Group
Benefits distribution capabilities and accelerates the company’s
technology strategy. Aetna has several options for use of the proceeds
of the transaction, including but not limited to internal investments to
enhance the company’s customer experience, share repurchases and
repayment of debt. The acquisition is expected to close in early
November 2017, subject to state regulatory approvals and other customary
closing conditions.
“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 The
Hartford’s Chairman and CEO 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.”
“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 S. Lynch.
Aetna and The Hartford will work together to support their mutual
customers. In addition, the majority of the Aetna Group Insurance
employees across the country who support the acquired business will
transfer to The Hartford.
The Hartford’s President Doug Elliot said, “The transaction combines two
franchises that are both committed to high-quality products,
best-in-class customer and claims service, and strong distribution
partnerships. We also welcome approximately 1,800 Aetna Group Insurance
employees nationwide and place great value on the talent they will bring
to our company.”
Through the acquisition, The Hartford also obtains industry-leading
digital assets and an integrated absence management platform, which will
enhance the experience the company delivers to its customers. Elliot
added, “Our claims organization continues to use data and advanced
analytics across workers’ compensation and disability to drive better
outcomes for customers in both business lines. As the nation’s second
largest workers’ compensation insurer, and now, the second largest group
disability insurer, this transaction increases our competitive
differentiation and potential for future product offerings for absence
management.”
In addition, the deal enhances The Hartford’s 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.
Additional Transaction Details
The Hartford will pay Aetna
cash consideration of $1.45 billion, primarily comprised of a ceding
commission, to be 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 projects the impact of the transaction to 2017 earnings per share
to be immaterial given the timing of the transaction and slightly
dilutive to 2018 earnings per share.
The acquisition will be accretive to The Hartford’s earnings in 2018 and
will be funded by dividends from its insurance subsidiaries and holding
company resources, including the $273 million remaining under the
company’s 2017 equity repurchase plan. The Hartford does not intend to
issue debt or equity in order to fund the cash consideration for the
acquisition and, as a result of the acquisition, does not currently
expect to authorize an equity repurchase plan for 2018.
The Hartford will host a conference call at 9:00 a.m. EDT on Oct. 23,
2017. The call can be accessed via a live listen-only webcast or as a
replay through the Investor Relations section of The Hartford's website
at https://ir.thehartford.com.
A replay of the call along with a transcript of the event will be
available for at least 90 days.
Additional information regarding the transaction can be found on The
Hartford’s website at https://www.thehartford.com,
including a presentation deck that summarizes key financial terms and
operating benefits of the acquisition, and in Current Reports on Form
8-K filed today with the Securities and Exchange Commission by The
Hartford and Aetna.
About Aetna
Aetna (NYSE: AET)
is one of the nation’s leading diversified health care benefits
companies, serving an estimated 44.7 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, Medicaid health
care management services, workers’ compensation administrative services
and health information technology products and services. Aetna’s
customers include employer groups, individuals, college students,
part-time and hourly workers, health plans, health care providers,
governmental units, government-sponsored plans, labor groups and
expatriates. For more information, see www.aetna.com
and learn
about how Aetna is helping to build a healthier world. @AetnaNews
About The Hartford
The Hartford is a leader in property and
casualty insurance, group benefits and mutual funds. With more than 200
years of expertise, The Hartford is widely recognized for its service
excellence, sustainability practices, trust and integrity. More
information on the company and its financial performance is available at https://www.thehartford.com.
Follow us on Twitter at www.twitter.com/TheHartford_PR.
The Hartford Financial Services Group, Inc., (NYSE: HIG) operates
through its subsidiaries under the brand name, The Hartford, and is
headquartered in Hartford, Conn. For additional details, please read The
Hartford’s legal notice.
HIG-F, HIG-G
Some of the statements in this release may be considered forward-looking
statements as defined in the Private Securities Litigation Reform Act of
1995. These forward-looking statements include statements relating to
the impact of the acquisition of Aetna’s Group Life and Disability
business, including, without limitation, the impact on The Hartford’s
and Aetna’s future earnings, earned premium and equity repurchase plans,
the projected closing date for the transaction and the projected impact
of the transaction on the parties. We caution investors that these
forward-looking statements are not guarantees of future performance, and
actual results may differ materially. Investors should consider the
important risks and uncertainties that may cause actual results to
differ. These important risks and uncertainties include those discussed
in the parties’ respective 2016 Annual Reports on Form 10-K, subsequent
Quarterly Reports on Form 10-Q, and the other filings they each make
with the Securities and Exchange Commission. Neither party assumes any
obligation to update this release, which speaks as of the date issued.
From time to time, The Hartford may use its website to disseminate
material company information. Financial and other important information
regarding The Hartford is routinely accessible through and posted on our
website at https://ir.thehartford.com.
In addition, you may automatically receive email alerts and other
information about The Hartford when you enroll your email address by
visiting the “Email Alerts” section at https://ir.thehartford.com.
1 Source: LIMRA, based on in-force master contracts,
certificates, total premiums collected as of Dec. 31, 2016, and
annualized premiums.
1 Total earned premium for both Aetna’s group life and
disability business and The Hartford’s group life and disability
business, expected for 2018.
