Hartford Financial Services Inc. has agreed to pay $1.45 billion to health insurer Aetna Inc. for a unit that provides life-, disability-income and other insurance products to employers' benefits programs in the U.S.
The acquisition will nearly double the Connecticut company's business of selling benefits to employers, one of its main operations outside of property-casualty insurance.
Hartford Chairman and Chief Executive Christopher Swift said in an interview that the acquisition "will make us one of the top-two players" in sales of the group-benefits products. Hartford's annual premium in the business will expand to about $5 billion from $3.15 billion in 2016, and there will be more than 20 million people insured by the combined operation.
Property-casualty insurance will remain Hartford's dominant business with more than $10.5 billion in annual premium. Hartford also has a mutual-funds operation.
Hartford's rivals in group insurance include Lincoln National Corp., MetLife Inc., Prudential Financial Inc. and Unum Group.
The deal marks another sign of Hartford's turnaround from struggles during the 2008-09 global markets meltdown. It was among the hardest-hit insurers, when a long market-leading position in sales of a stock-market-linked retirement-income product proved riskier than anticipated. It took $3.4 billion in U.S. government aid, since repaid.
In a news release, Aetna President Karen S. Lynch said the divestiture allows "a stronger focus on our strategy of creating a personalized approach to improving member health." Aetna said options for deploying sales proceeds include internal investments, share repurchases and debt repayment.
Hartford doesn't intend to issue debt or equity to fund the purchase. It said it would use some money allocated for share buybacks and said the transaction would add to its 2018 earnings.
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(END) Dow Jones Newswires
October 23, 2017 07:28 ET (11:28 GMT)