Aetna to buy Genworth's Medicare supplement business

(Reuters) - Health insurer Aetna Inc (AET.N) agreed to acquire the Medicare supplement business of life and mortgage insurer Genworth Financial Inc (GNW.N) for $290 million to broaden its presence in the U.S. government program for seniors.

Genworth, which had been through rough times during the U.S. mortgage crisis, said it will record an after-tax gain of about $35 million related to the sale.

Aetna, which hopes to close the deal during the fourth quarter, expects the transaction to be neutral to its 2012 earnings and modestly add thereafter.

The deal includes the sale of Continental Life Insurance Company of Brentwood, Tennessee and its subsidiary, American Continental Insurance Company, Genworth said.

Medicare supplement products cover deductibles, co-pays and other expenses not covered under Medicare Parts A and B.

The business being acquired had about $317 million in net earned premium for 2010.

Aetna expects to keep the staff and current management at Brentwood, Tennessee.

Aetna shares closed at $42.86 on Friday on the New York Stock Exchange, while Genworth shares were up 1 percent at $10.23 in pre market trade on Monday.

(Reporting by Anand Basu in Bangalore; Editing by Don Sebastian)