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Humana to divest closed block of commercial long-term care insurance business
Humana has agreed to sell the stock of its subsidiary, KMG America Corporation, to Continental General Insurance Company (CGIC).
The sale of the stock of KMG will also include a capital contribution of about $203m of Humana parent company capital, subject to customary adjustments, apart from the transfer of approximately $150m of statutory capital
Once the acquisition is completed, Continental will have cash and invested assets of about $3.5bn.
On the other hand, Humana expects a loss of $400m or $2.75 per share, associated with the sale of KMG.
The transaction, which is subject to customary closing conditions, including South Carolina Department of Insurance approval, is expected to close by the third quarter of 2018.
As per Humana, the estimated loss includes a pretax loss of approximately $900m, offset by the expected tax benefit of approximately $500m. The company stated that the loss from the sale will be excluded from Adjusted earnings per share.
HC2 chairman, president and CEO Philip Falcone said: “The acquisition of Humana’s long-term care insurance business marks another significant milestone in the growth of our insurance subsidiary.
HC2 closed its initial acquisitions of American Financial Group’s long-term care insurance businesses almost two years ago.
Falcone said: ”In addition, we believe this transaction is further validation of our platform and our strategy and represents industry recognition as the counterparty of choice for future LTC transactions. We look forward to leveraging this platform to generate meaningful growth.”
Image: Humana agrees to sell KMG America to HC2’s Continental General Insurance. Photo: Courtesy of adamr/FreeDigitalPhotos.net.