Aetna is selling its group life and disability business to The Hartford Group for $1.45 billion, according to the Connecticut insurer.
The acquisition is expected to close in early November.
It allows Aetna to concentrate on its core business of health insurance and includes an exclusive, multi-year collaboration in which Aetna will offer The Hartford's group life and disability products through its medical sales team.
Aetna's options for use of the proceeds include repayment of debt and internal investments in the company's customer service, The Hartford said.
Aetna is holding an earnings call on October 31. It said it projects the impact of the transaction to reported earnings per share to be immaterial given the timing of the transaction.
"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," said Aetna President Karen Lynch.
For The Hartford Group, the acquisition allows the company to become the second largest group life and disability insurer, a business that has a stable risk profile, attractive returns and strong long-term growth prospects, according to The Hartford's CEO Christopher Swift.
It further accelerates The Hartford's strategies for distribution, digital capabilities and claim outcomes.
"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," 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."
The majority of the Aetna Group Insurance 1,800 employees across the country who support the acquired business will transfer to The Hartford.
The acquisition will be funded by dividends from The Hartford's insurance subsidiaries and holding company resources, including the $273 million remaining under the company's 2017 equity repurchase plan. The company said it does not intend to issue debt or equity to fund the acquisition.
"Our claims organization continues to use data and advanced analytics across workers' compensation and disability to drive better outcomes for customers in both business lines," said The Hartford's President Doug Elliot. "As the nation's second largest workers' compensation insurer, and now, the second largest group disability insurer, this transaction increases our competitive differentiation and potential for future product offerings for absence management."