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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to
Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 20, 1998
AETNA INC.
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(Exact Name of Registrant as Specified in its Charter)
Connecticut
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(State or Other Jurisdiction of Incorporation)
1-11913 02-0488491
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(Commission File Number) (I.R.S. Employer
Identification No.)
151 Farmington Avenue, Hartford, Connecticut 06156
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(Address of Principal Executive Offices) (ZIP Code)
(860) 273-0123
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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TABLE OF CONTENTS
Page
Item 5. Other Events. 3
Item 7(c). Exhibits. 3
Signatures 4
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Item 5. Other Events.
Aetna Inc. announced today that it has entered into a definitive agreement to
sell its domestic individual life insurance business to Lincoln National
Corporation for $1 billion in cash. The transaction, to be accomplished through
an indemnity reinsurance agreement, is subject to federal and state regulatory
approvals and other customary conditions. It is expected to close in the fall of
1998.
The transaction includes approximately $50 billion of individual life
insurance in-force as well as access to a managing general agent and brokerage
distribution channel. The insurance involved is in the following lines:
traditional life, universal life, participating life, sponsored life and
corporate-owned life insurance. It does not include Aetna's overall financial
services business, including its annuities business, or its group life or
international life insurance businesses.
A copy of the press release announcing this transaction is attached hereto as
Exhibit 99, which exhibit is incorporated herein by reference.
Item 7(c). Exhibits.
Exhibit 99 Press Release of Aetna Inc. dated May 21, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AETNA INC.
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(Registrant)
Date May 21, 1998 By /s/ Alan M. Bennett
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Alan M. Bennett
Vice President
and Corporate Controller
(Chief Accounting Officer)
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EXHIBIT INDEX
Exhibit No. Description
99 Press Release of Aetna Inc. dated May 21, 1998
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AETNA TO SELL DOMESTIC
INDIVIDUAL LIFE BUSINESS TO LINCOLN NATIONAL
Hartford, CT, May 21, 1998 -Aetna (NYSE: AET) has agreed to sell its domestic
individual life insurance business to Lincoln National Corporation (NYSE: LNC)
for $1 billion in cash under a definitive agreement announced today. The
transaction, to be accomplished through an indemnity reinsurance agreement, is
subject to federal and state regulatory approvals and other customary
conditions. It is expected to close in the fall of 1998.
The transaction includes approximately $50 billion of individual life
insurance in-force as well as access to a managing general agent and brokerage
distribution channel. The insurance involved is in the following lines:
traditional life, universal life, participating life, sponsored life and
corporate-owned life insurance (COLI). It does not include Aetna's overall
financial services business, including its annuities business, or its group life
or international life insurance businesses.
"The sale of Aetna's U.S.-based individual life insurance business is consistent
with our strategy of focusing on businesses that have greater scale, strong
demographics and offer high-growth potential," Aetna Chairman and CEO Richard L.
Huber said. "Further, our domestic individual life customer base represented
less than 5 percent of Aetna's total life customers. In Aetna U.S. Healthcare,
our large U.S. group life business continues to be an integral part of our
strategy of offering a broad array of employee benefit products. In Aetna
International, life insurance continues to be key to our emerging market growth
strategy."
"This sale is consistent with Aetna Retirement Services' strategy of exiting
slower growing businesses to focus its attention and resources on the
higher-growth, higher-return financial services business," said Thomas J.
McInerney, president of Aetna Retirement Services (ARS). "We also took into
account that ARS is a relatively small player in the individual life business."
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"ARS will pursue our strategy of growing our assets under management, expanding
our investment management capabilities and continuing to build market share in
the defined contribution and annuity businesses," McInerney said. "In addition,
we are committed to leveraging our existing retail distribution channels such as
Financial Network Investment Corporation (FNIC). Although we no longer will be
in the business of `manufacturing' individual life products in the U.S., we will
continue to distribute other companies' life products to satisfy our customer
needs."
Under the indemnity reinsurance agreement, Lincoln will assume the liabilities
of the acquired businesses. In addition to receiving the purchase price of $1
billion, Aetna will retain approximately $225 million in statutory surplus and
capital gains recognized in connection with the transfer of investment assets.
Aetna has several alternatives for use of the proceeds, including internal
investments, strategic acquisitions and share repurchase. "We plan to
aggressively repurchase the remaining 4.3 million shares under our current
authorization in 1998," Huber said.
"In considering this transaction, we searched for a highly respected company
that could provide both the best potential for success and a clear commitment to
Hartford. This sale allows Lincoln National to add to their leadership position
by drawing upon the many talented people throughout Aetna's domestic individual
life business and offers Hartford an opportunity to retain and grow jobs."
Huber noted that while some jobs may be affected, the companies plan to rely on
attrition and redeployment as much as possible over the transition period.
"Both companies plan to work together to make this a very smooth transition
for our customers, agents and employees," Huber said. Lincoln National now has
600 employees in Bloomfield, Conn., and will relocate soon to a downtown
Hartford facility.
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Aetna is a leading provider of health and retirement benefit plans and financial
services, with three core businesses: Aetna U.S. Healthcare, Aetna Retirement
Services and Aetna International. Aetna provides nearly 35 million people
worldwide with quality products, services and information that help them manage
what matters most: their health and financial well-being. Aetna's web site
address is www.aetna.com.
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CAUTIONARY STATEMENT - Certain information in this press release is forward
looking including, but not limited to, statements concerning the expected timing
of the closing of the proposed transaction and Aetna's anticipated use of
proceeds from the transaction. That information is based on management's
estimates, assumptions and projections, and is subject to significant
uncertainties (many of which are beyond the control of Aetna) that could cause
actual future events or results to differ from those forward-looking
statements. These matters include, but are not limited to, the timing of receipt
of regulatory approvals or other matters that would affect the ability to
successfully close the transaction on a timely basis, as well as matters that
would potentially affect Aetna's other sources and uses of cash. For a
discussion of important risk factors that may materially affect Aetna, and its
forward-looking statements in this press release, please see the risk factors
contained in Aetna's 1997 Annual Report on Form 10-K and March 16, 1998 Form 8-K
filed with the Securities and Exchange Commission and 1997 Annual Report to
Shareholders, which risk factors are incorporated herein by reference.
