Aetna (NYSE: AET) has expanded, and just in time to prepare for a burgeoning retirement-age Baby Boomer population, says the company’s CEO. Aetna is acquiring Genworth’s Medicare Supplement business and related blocks of in-force business for approximately $290 million.
The deal, which is expected to close during the fourth quarter of 2011, includes more than 145,000 of Genworth’s Medicare Supplement members. Aetna, based in Hartford, Conn., will obtain 100% of the stock of Continental Life Insurance Company of Brentwood, Tenn. along with reinsuring related blocks of in-force business; the company’s press release states its intentions to maintain the business’ current management, staff and operations.
“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.”
The company says 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. Genworth’s Medicare Supplement business netted approximately $317 million in 2010, and Aetna projects the acquisition to be neutral to its 2012 earnings with gradual increases in following years.
Written by Alyssa Gerace