GE Capital to Buy Aon Insurance Unit : Acquisitions: Deal for Life Insurance Co. of Virginia would add about $9 billion in assets to GE subsidiary.
General Electric Capital Corp., in its latest move to boost its life insurance business, agreed to buy Aon Corp.’s Life Insurance Co. of Virginia unit for $960 million in cash.
The acquisition would add about $9 billion in assets to GE Capital’s GNA Corp. insurance subsidiary, bringing its total assets to $30 billion.
The sale comes as Chicago-based Aon focuses on its more profitable businesses, such as insurance consulting. As part of that strategy, Aon said last month that it will also sell its Union Fidelity Life Insurance Co. to Stamford-based GE Capital for about $400 million in cash.
The latest acquisition “is key to GNA’s corporate strategy to help people build, protect and transfer wealth,” said Patrick Welch, GNA president and chief executive. It also reflects the blurring lines between life insurers and financial services companies as they compete for the retirement savings of baby boomers.
The Virginia company sells annuities, a type of retirement investment plan, as well as life insurance, and also guaranteed investment contracts, which promise a fixed return on a lump-sum deposit similar to a bank certificate of deposit.
Life Insurance Co. of Virginia was established in 1871 and has 600 employees in Richmond. It sells through a network of 400 agents in 31 offices nationwide.
Neil McGarity, a spokesman for General Electric Co. subsidiary GE Capital, said it is “too early to say” whether any employees could lose their jobs because of the purchase.
Nutmeg Securities Ltd. analyst Ira Zuckerman said: “This gives GE Capital a way to expand their financial services. Aon can use the money to buy back stock and expand its agency operations.”
Aon stock closed unchanged at $50.00; GE shares rose 50 cents to $72.125. Both trade on the New York Stock Exchange.
Aon said in September that it hired Lazard Freres & Co. and Morgan Stanley & Co. to help it search for buyers for Life Insurance Co. of Virginia and for Union Fidelity, which is based in Trevose, Pa.
