American health insurance company Humana has agreed to sell its wholly-owned subsidiary, KMG America Corporation (KMG) to Continental General Insurance Company (CGIC), a Texas-based insurance firm wholly owned by HC2 Holdings.
KMG’s subsidiary, Kanawha Insurance Company (KIC), includes Humana’s closed block of non-strategic commercial long-term care insurance policies that serves about 30,100 policyholders.
Humana will make $203m cash capital contribution to Kanawha in addition to transferring almost $150m of statutory capital before completion of the deal.
Upon th ecompletion of the proposed sale of KMG, Humana will have no remaining exposure to the commercial long-term care insurance business.
Humana said it expects to register a net loss associated with the sale of KMG of approximately $400m, or $2.75 per diluted common share. The estimated loss includes a pretax loss of approximately $900m, offset by the expected tax benefit of approximately $500m, the company said.
Pending receipt of regulatory approvals including South Carolina Department of Insurance approval, the KMG sale is expected to complete by the third quarter of 2018.