Aetna, the nation's third-largest health insurer, has plans to leave Connecticut and move to New York, but it is selling its domestic group life and disability businesses for $1.45 billion to a Connecticut-based company, Hartford Life and Accident Insurance Co.
Aetna said the cash deal also includes its absence management business and should close next month.
“It’s really two cross-town friends coming together to support the group benefits business,” Christopher Swift, the chairman and CEO of the Hartford, said.
The company expects the acquisition to close in early November.
"This is a unique opportunity to deploy capital to acquire a substantial benefits business, a market that we know well, and we expect a smooth and timely integration. Our Group Benefits book has excellent margins and a strong market position, and this acquisition further accelerates our strategies for distribution, digital capabilities and claim outcomes,” Swift said in a statement.
Swift said all 1,800 Aetna jobs within the sector will be transferred to The Hartford by Jan. 1 and 250 of those are in Connecticut. Swift said they will stay here, for now. The Hartford emphasized that it plans to keep the majority of positions it is acquiring.
“We’re bringing everyone onboard. We’ll have to go through an integration phase and optimize operations,” Swift said.
Local
Employees will work out of the company’s Hartford or Windsor offices. The rest, which are scattered throughout the country, won’t be moving to Connecticut.
“We don’t have anything against moving jobs to Connecticut but unless there’s a valid business reason, we’ll probably keep these centers of excellence in regions of the country,” Swift said.
Swift said the deal provides neither a net gain nor a loss of jobs in the short term. In the next two years that could change.
There could be some job reductions, but really what we’re trying to do is take the best of both and build the company for the future that could be very competitive,” Swift said.
Health insurance is Aetna's main business. The insurer covers more than 22 million people, and its health care segment brought in $1.8 billion in pretax adjusted earnings in the second quarter.
In contrast, the insurer's group insurance business, which includes life and disability coverage, reported pretax, adjusted earnings of $42 million.
“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,” Aetna president Karen S. Lynch said in a statement.
Aetna Inc. will report third-quarter results on Oct. 31. It said this deal will be immaterial to 2017 earnings per share due to the timing but will be slightly dilutive for next year. The company announced in June that it will be moving to New York City.
