(By Balaseshan) American Financial Group (NYSE:AFG), which engages in property and casualty insurance, said it has closed sale of its Medicare Supplement and Critical Illness businesses to Cigna Corp. (NYSE:CI) for about $305 million in cash.
AFG will realize an after-tax gain of about $120 million to $130 million on the sale, subject to post-closing adjustments.
AFG's balance supplemental insurance operations consist solely of its run-off long-term care business, which has a book value of approximately $170 million, and which will continue to be based in Austin, Texas. AFG's Austin-based life and annuity operations will transition to its home office in Cincinnati, Ohio before the end of the year.
American Financial's Medicare Supplement and Critical Illness businesses is headquartered in Austin, Texas and doing business as Great American Supplemental Benefits Group.
The company continues to analyze its projected long-term care claims and persistency experience with the assistance of an external actuarial consulting firm, including a comparison to their large, uniform database of industry experience.
American Financial expects to complete its analysis of the actuarial assumptions used to amortize deferred acquisition costs and establish reserves in its long-term care business prior to the end of 2012.
In a separate release, American Financial announced the completion of a tender offer for all outstanding shares of Marketform Group Ltd., increasing its ownership interest from 72% to 100%, effective August 24. Terms of the transaction were not disclosed.
AFG is trading up 1.10% at $37.63 on Friday, while CI trades up 0.42% at $45.87.