We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Hartford Financial Grows in Life & Disability With Aetna Arm
Read MoreHide Full Article
The Hartford Financial Services Group, Inc (HIG - Free Report) announced that it has entered into a definitive agreement to acquire the U.S. group life and disability business of Aetna Inc. for a cash consideration of $1.45 billion. The transaction is expected to culminate in November 2017.
This buyout aims to expand Hartford Financial’s Group Benefits distribution capabilities and ramp up its technology strategy.
Transaction Details
The purchase consideration of $1.45 billion comprises a ceding commission which will be paid by Hartford Life & Accident Insurance Company, the primary Group Benefits insurance operating subsidiary of Hartford Financial.
The transaction also includes an exclusive, multi-year collaboration deal per which Aetna will be offering Hartford Financial’s group life and disability products through its medical sales team.
Aetna’s book of group life and disability insurance, which had premiums of approximately $2 billion in 2016 will be reinsured by Hartford Financial on an indemnity basis. Post takeover, most of the Aetna Group Insurance employees across the country will be transferred to Hartford Financial.
Financing the Transaction
Hartford Financial intends to finance the cash consideration by deploying dividends from its insurance affiliates and holding company resources, including $273 million under its 2017 share repurchase plan. The company does not expect any share repurchase authorization in 2018.
Hartford Financial does not expect to issue any debt or equity for financing the buyout.
Rationale of the Transaction
This transaction will help Hartford Financial to emerge as the second-largest group life and disability insurer. Group life and disability, banking on its stable risk profile, lucrative returns and strong long-term growth prospects, is a significant business for Hartford Financial.
Joining forces with Aetna will strengthen Hartford Financial’s foothold as a leader in the large employer market and expand its presence among midsize employer clients. Moreover, Hartford Financial will be able to grab new opportunities to distribute complementary products to a customer base of more than 20 million to be insured by the combined business.
This transaction will also be beneficial to both entities’ shareholders and customers, and help them focus in a personalized manner to improve member health. The transaction will be accretive to Hartford Financial’s 2018 earnings per share.
With this acquisition, the acquirer will be able to leverage the industry-leading digital assets and an integrated absence management platform to improve customer experience.
Aetna, on the other hand, intends to utilize the sale proceeds for various purposes, including but not restricted to internal investments, share repurchases and debt repayment. Though the transaction will not affect its 2017 bottom line, it will be slightly dilutive to the 2018 bottom line.
Hartford Financial continues to utilize data and advanced analytics across workers’ compensation and disability to drive better results for clients across group life and disability lines. As the nation’s second-largest workers’ compensation insurer and group disability insurer, this buyout improves Hartford Financial’s competitive position in the market and enhances its capabilities for future product offerings in the line of absence management.
A.M. Best Jumps Into Action
Following the announcement of the acquisition, A.M. Best commented that the credit ratings of Hartford Financial and its affiliates remain unchanged.
The rating agency expects the financial leverage and coverage measures at the holding company to remain within levels that support the current ratings. Further, it expects the risk-adjusted capitalization of the entities to remain at adequate levels.
Insurers Opting the Inorganic Route
Mergers and acquisitions not only add capabilities to a portfolio but also expand geographical footprint of companies, thereby expanding their growth profile. Hence, acquisitions rage the insurance space. Earlier this month, White Mountains Insurance Group, Ltd. (WTM - Free Report) announced that it has entered into an agreement to acquire a 50% stake in DavidShield to gain a premier spot in the accident and health insurance market. Arthur J. Gallagher & Co. (AJG - Free Report) recently acquired Santa Fe, New Mexico-based Reynolds & Rodar Insurance Group, Inc to expand its presence in New Mexico.
Zacks Rank & Share Price Movement
Hartford Financial carries a Zacks Rank #3 (Hold). Shares of Hartford Financial have outperformed the industry year to date. While Hartford Financial’s shares have returned 13.4%, the industry has gained 9.5%. We expect the company’s diversified product offerings and strategic acquisitions to further drive its shares in the near term.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
Image: Bigstock
Hartford Financial Grows in Life & Disability With Aetna Arm
The Hartford Financial Services Group, Inc (HIG - Free Report) announced that it has entered into a definitive agreement to acquire the U.S. group life and disability business of Aetna Inc. for a cash consideration of $1.45 billion. The transaction is expected to culminate in November 2017.
This buyout aims to expand Hartford Financial’s Group Benefits distribution capabilities and ramp up its technology strategy.
Transaction Details
The purchase consideration of $1.45 billion comprises a ceding commission which will be paid by Hartford Life & Accident Insurance Company, the primary Group Benefits insurance operating subsidiary of Hartford Financial.
The transaction also includes an exclusive, multi-year collaboration deal per which Aetna will be offering Hartford Financial’s group life and disability products through its medical sales team.
Aetna’s book of group life and disability insurance, which had premiums of approximately $2 billion in 2016 will be reinsured by Hartford Financial on an indemnity basis. Post takeover, most of the Aetna Group Insurance employees across the country will be transferred to Hartford Financial.
Financing the Transaction
Hartford Financial intends to finance the cash consideration by deploying dividends from its insurance affiliates and holding company resources, including $273 million under its 2017 share repurchase plan. The company does not expect any share repurchase authorization in 2018.
Hartford Financial does not expect to issue any debt or equity for financing the buyout.
Rationale of the Transaction
This transaction will help Hartford Financial to emerge as the second-largest group life and disability insurer. Group life and disability, banking on its stable risk profile, lucrative returns and strong long-term growth prospects, is a significant business for Hartford Financial.
Joining forces with Aetna will strengthen Hartford Financial’s foothold as a leader in the large employer market and expand its presence among midsize employer clients. Moreover, Hartford Financial will be able to grab new opportunities to distribute complementary products to a customer base of more than 20 million to be insured by the combined business.
This transaction will also be beneficial to both entities’ shareholders and customers, and help them focus in a personalized manner to improve member health. The transaction will be accretive to Hartford Financial’s 2018 earnings per share.
With this acquisition, the acquirer will be able to leverage the industry-leading digital assets and an integrated absence management platform to improve customer experience.
Aetna, on the other hand, intends to utilize the sale proceeds for various purposes, including but not restricted to internal investments, share repurchases and debt repayment. Though the transaction will not affect its 2017 bottom line, it will be slightly dilutive to the 2018 bottom line.
Hartford Financial continues to utilize data and advanced analytics across workers’ compensation and disability to drive better results for clients across group life and disability lines. As the nation’s second-largest workers’ compensation insurer and group disability insurer, this buyout improves Hartford Financial’s competitive position in the market and enhances its capabilities for future product offerings in the line of absence management.
A.M. Best Jumps Into Action
Following the announcement of the acquisition, A.M. Best commented that the credit ratings of Hartford Financial and its affiliates remain unchanged.
The rating agency expects the financial leverage and coverage measures at the holding company to remain within levels that support the current ratings. Further, it expects the risk-adjusted capitalization of the entities to remain at adequate levels.
Insurers Opting the Inorganic Route
Mergers and acquisitions not only add capabilities to a portfolio but also expand geographical footprint of companies, thereby expanding their growth profile. Hence, acquisitions rage the insurance space. Earlier this month, White Mountains Insurance Group, Ltd. (WTM - Free Report) announced that it has entered into an agreement to acquire a 50% stake in DavidShield to gain a premier spot in the accident and health insurance market. Arthur J. Gallagher & Co. (AJG - Free Report) recently acquired Santa Fe, New Mexico-based Reynolds & Rodar Insurance Group, Inc to expand its presence in New Mexico.
Zacks Rank & Share Price Movement
Hartford Financial carries a Zacks Rank #3 (Hold). Shares of Hartford Financial have outperformed the industry year to date. While Hartford Financial’s shares have returned 13.4%, the industry has gained 9.5%. We expect the company’s diversified product offerings and strategic acquisitions to further drive its shares in the near term.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>