Marking its third significant
acquisition since the start of 2011, US health insurer Aetna is to
acquire Continental Life Insurance Company from Genworth Financial
in a cash deal worth $290m. This brings the total committed to
acquisitions by Aetna to just under $1.4bn.
Continental Life is the unit
through which Genworth supplies Medicare supplement insurance and
will bring with it more than 145,000 Medicare supplement
members.
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Medicare supplement insurance
covers the 20% of health care costs not covered under the federal
Medicare health insurance system. Medicare provides insurance for
people aged 65 and over, and for younger people who are permanently
physically disabled or who have a congenital physical disability.
The business being acquired by Aetna recorded net earned premium
income of $317m in 2010.
Aetna chairman, CEO and
president Mark Bertolini said that the deal would significantly
expand Aetna’s footprint in the Medicare Supplement
business.
“This important growth
opportunity comes at a time when the Medicare population is
anticipated to increase as Baby Boomers reach age 65,” he said.
“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 acquisition of Genworth’s
Medicare supplement insurance unit follows Aetna’s acquisitions
earlier this year of Prodigy Health Group for $600m and Medicity
for $500m.
Prodigy Health is the US’
largest independent third party administrator of self-funded health
care plans and has some 600,000 medical members and 450,000
pharmacy members. Medicity provides products and services that
enable health systems, hospitals, physician practices and health
information exchanges to access and exchange health care
information.
From its perspective Genworth chairman and CEO Michael
Fraizer said the sale of its Medicare supplement business
represented another step in Genworth’s strategy of focusing on
retirement and protection segment in markets where it believes it
has the “strongest value propositions”. The sale of the Medicare
supplement insurance unit comes some six months after Genworth
announced its exit from the US variable annuity market.
