Aetna has agreed to acquire the disability business of Broadspire, a privately-held provider of disability and casualty claim management services, for approximately $160 million.
Broadspire’s disability business operates as a third party administrator offering absence management services, including short-term and long-term disability administration and leave management, to employers.
Broadspire also operates a workers’ compensation and casualty administration business, which is not part of this transaction.
Aetna said it expects to finance the transaction from available cash. The transaction is subject to customary closing conditions, including federal Hart-Scott-Rodino antitrust regulatory approval. Aetna expects to close the transaction during the second quarter of 2006, and that it will become accretive to earnings within 12 months of the closing.
Aetna expects this acquisition will increase its disability membership to approximately 5 million, by adding approximately 1.3 million short-term disability members, 1 million in long-term disability and 700,000 members in total absence management, which includes the Family Medical Leave Act, which the insurer said it sees as a significant product opportunity.
Hartford, Conn.-based Aetna’s disability business currently serves approximately 1.1 million short-term and 1.5 million long-term disability members.
Headquartered in Plantation, Florida, Broadspire’s disability business has approximately 850 employees, more than 600 of whom are located in Florida. It also maintains offices in Maine and Massachusetts.
“We believe this acquisition will further position Aetna as the leader in integrated health and disability, with expanded product offerings such as leave management, and disability management expertise,” said Ronald A. Williams, Aetna CEO and president. “This transaction fits well with Aetna’s stated strategy of making acquisitions designed to enhance the company’s capabilities. In addition, we believe it will provide significant opportunities to cross-sell medical, disability, group life and other products within both the Aetna and Broadspire disability business’ customer base.”
“This complementary transaction aligns with Aetna’s overall group insurance strategy of leveraging our health assets to deliver broad, integrated, consumer-centric products and services across all life stages, whether you are healthy, disabled or approaching the end of life,” said James K. Foreman, executive vice president and head of Aetna’s National Businesses, which includes Aetna’s Specialty Products organization. “By integrating Broadspire’s disability business’ full-administration service, technology and reporting capabilities in absence management with Aetna’s health care and clinical expertise in disability event management, we can offer our customers enhanced products and services to optimize health and productivity.”
Was this article valuable?
Here are more articles you may enjoy.