Oct. 23 (UPI) -- The Hartford announced Monday it will buy Aetna's group life and disability business in the United States for nearly $1.5 billion in cash.
The company, with headquarters in Connecticut's capital, will become the second-largest group life and disability insurer with projected $5 billion in earned premium, the pair said Monday.
"The combination of these two businesses strengthens our position as a leader in the large employer market and increases our presence among midsize employer clients," Hartford Chairman and CEO Christopher Swift said. "It also creates new opportunities to distribute additional products to a customer base of more than 20 million people who will be insured by the combined business."
Aetna said it has "several options" for the proceeds when the deal closes next month, including "internal investments to enhance the company's customer experience, share repurchases and repayment of debt."
Aetna said it plans to focus on its health business to consumers, employers and those insured by Medicaid and Medicare.
"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 Lynch said in a statement.
Aetna is competing with UnitedHealth Group, Cigna and Anthem in administering health benefits for seniors going to Medicare Advantage plans.
The approximately 1,800 Aetna Group Insurance employees nationwide will become Hartford employees.
Hartford is the 13th-largest property and casualty insurer in the United States with $11.3 billion in premiums and a 1.85 percent market share, according to the National Association of Insurance Commissioners, a multi-state insurance regulatory body.
Hartford started in 1810 as a fire insurance company and had its own fire department to protect customers. Last year, it had revenue of $18.3 billion and 16,900 employees. Aetna was founded in 1853 as an annuity fund to sell life insurance. Its revenue last year was about $63.2 billion.