Genworth Financial Inc. said Monday that it has reached an agreement to sell its Medicare supplement business to Aetna Inc. for $290 million. The capital that will be able to be redeployed as a result of the transaction within its life insurance companies is about $240 million, the company said in a press release.
Richmond-based Genworth will record an after-tax gain of about $35 million related to the sale and anticipates that the transaction will close in the fourth quarter of 2011, following shareholder and regulatory approvals. Existing Medicare supplement policies will remain in effect following the transaction, and policyholders will continue to have access to full benefits of their policies.
“This sale represents another step in executing our strategy to concentrate on leadership positions within our businesses,“ Michael D. Fraizer, Genworth’s chairman and CEO said in a statement. He added that the transaction benefits both parties, “as it moves a sound platform to a company that is committed to the long term development of the Medicare supplement business, while allowing Genworth to focus our Retirement and Protection segment in markets where we have the strongest value propositions. Looking ahead, we continue to actively pursue strategies that free capital for targeted redeployment and enhance shareholder value over time.“
The transaction includes the sale of Continental Life Insurance Co. of Brentwood, Tenn., and its subsidiary, American Continental Insurance Co. It also includes reinsurance agreements between certain Genworth life insurance subsidiaries and Aetna to transfer the Medicare supplement in-force business sold by these Genworth entities.
J.P. Morgan Securities LLC advised Genworth on the transaction.
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