Lifeco’s U.S. focus to be on its financial services businesses
WINNIPEG, Nov. 26, 2007 – Great-West Lifeco Inc. announced today that its subsidiary, U.S.-based Great-West Life & Annuity Insurance Company, has signed a definitive agreement to sell its health care business, Great-West Healthcare, to a subsidiary of CIGNA Corporation. The transaction has an enterprise value of US $2.25 billion and is expected to close during the first half of 2008, subject to regulatory and certain other approvals.
“In the United States, Great-West Lifeco will now be entirely focused on broadening and expanding its financial services business,” said Raymond L. McFeetors, President and Chief Executive Officer of Great-West Lifeco.
Great-West Healthcare provides a variety of medical, dental, vision, life and disability coverage to approximately 5,200 employer groups and 2.2 million members across the United States.
“We are committed to working with CIGNA to facilitate a smooth and efficient transition for Great-West Life & Annuity’s current U.S. group health care customers, distribution systems and employees,” McFeetors said.
“In Great-West Healthcare, CIGNA is acquiring a well-run organization with a strong team and a reputation for quality service and innovation,” said H. Edward Hanway, CIGNA chairman and chief executive officer.
Great-West Life & Annuity will receive US $1.5 billion in cash and will retain an estimated US $750 million representing the amount of equity invested in the business as at the anticipated closing date. After payment of taxes and write-offs associated with intangibles and certain other assets of the business, the Company will have approximately US $1.6 billion that will be used to repay bridge financing associated with the acquisition of Putnam Investments, LLC, which transaction was completed on August 3, 2007.
Goldman, Sachs & Co. acted as Great-West Life & Annuity’s financial advisor for the transaction, and Dewey & LeBoeuf LLP acted as legal counsel.
Great-West Life & Annuity will continue to serve its more than 4 million financial services customers through its Great-West Retirement Services(R) and Individual Markets business lines. These business units offer employer-sponsored defined contribution savings plans and services, business-owned life insurance products, and individual life insurance and annuity products.
Through acquisitions and organic growth, Great-West Life & Annuity’s assets under management in its Retirement Services and Individual Markets businesses have grown to US $127 billion at Sept. 30, 2007 from US $87 billion at year-end 2005. Great-West Lifeco assets under administration in the U.S., including those of Putnam, total US $336 billion.
Great-West Healthcare, a division of Great-West Life & Annuity, is a national employee benefits provider with expertise in self-funding and health care management solutions. Nationally, the division operates a health care network that includes 4,275 hospitals and 578,000 providers and provides health care services to 2.2 million people.
Great-West Life & Annuity Insurance Company, headquartered in metro-Denver, serves its customers through a full range of health care plans, life and disability insurance, annuities, and retirement savings products and services. It is an indirect, wholly owned subsidiary of Great-West Lifeco Inc. Great-West Life & Annuity Insurance Company is not licensed to do business in New York. Products are sold in New York by its subsidiary, First Great-West Life & Annuity Insurance Company, White Plains, N.Y.
Great-West Lifeco Inc. (TSX:GWO) is a financial services holding company with interests in the life insurance, health insurance, retirement savings, investment management and reinsurance businesses. The Company has operations in Canada, the United States, Europe and Asia through The Great-West Life Assurance Company, London Life Insurance Company, The Canada Life Assurance Company, Great-West Life & Annuity Insurance Company and Putnam Investments, LLC. Lifeco and its companies have over $400 billion in assets under administration. Great-West Lifeco is a member of the Power Financial Corporation group of companies. www.greatwestlifeco.com.Tags: Cigna, Great-West Life