Travelers Group agreed to buy Aetna's domestic property and casualty insurance business for $4 billion, creating one of the country's biggest sellers of the insurance, the companies announced Wednesday.
Aetna's board approved the buyout in a meeting late Tuesday night. The deal marks further shrinkage of the property-casualty insurance business, which has been hurt by low premiums and high-priced pollution claims in recent years.Aetna has been trying to sell the property-casualty unit for months and said this morning the money would be used to invest in managed health care and financial services businesses in the United States and abroad.
Property-casualty lines include auto and homeowners' insurance and business insurance such as workers' compensation.
Travelers beat out leveraged buyout specialists Kohlberg Kravis Roberts & Co. and Chicago-based CNA Financial Corp. for the Aetna unit. KKR and Travelers made similar dollar offers, but Aetna preferred Travelers' cash bid, The Wall Street Journal reported Wednesday.
Travelers' shares rose $1.871/2 cents, or 3.4 percent, to $57 in early trading Wednesday on the New York Stock Exchange. Aetna's shares rose 121/2 cents to $76.
New York-based Travelers said it will form a new holding company to house the property and casualty operations of both companies.
Up to 3,300 workers will be laid off, with half the cuts in Hartford, where the new company will be based. Cost savings of $300 million are projected over two years, Travelers said.