Aetna Group Insurance

On November 1, 2017, The Hartford acquired Aetna's U.S. group life and disability business through a reinsurance transaction for total consideration of $1.452 billion and recorded provisional estimates of the fair value of the assets acquired and liabilities assumed. In September 2018, The Hartford and Aetna agreed on the final assets acquired and liabilities assumed as of the acquisition date and The Hartford finalized its provisional estimates with a final cash settlement in October. As a result, in the third quarter of 2018, The Hartford recorded additional assets and liabilities at fair value of $80 and $80, respectively, with no change in goodwill. The following table presents the preliminary allocation of the purchase price to the assets acquired and liabilities assumed as of the acquisition date, the measurement period adjustments recorded, and the final purchase price allocation.

Fair Value of Assets Acquired and Liabilities Assumed at the Acquisition Date



	Preliminary Value as of November 1, 2017 (as previously reported as of December 31, 2017)		Measurement Period Adjustments			As Adjusted Value as of November 1, 2017
Assets
Cash and invested assets [1]	$	3,360	$	45		$	3,405
Premiums receivable	96		7			103
Deferred income taxes, net	56		13			69
Other intangible assets	629		—			629
Property and equipment	68		—			68
Reinsurance recoverables	—		31			31
Other assets	16		(16		)	—
Total Assets Acquired	4,225		80			4,305
Liabilities
Unpaid losses and loss adjustment expenses	2,833		71			2,904
Reserve for future policy benefits payable	346		1			347
Other policyholder funds and benefits payable	245		1			246
Unearned premiums	3		1			4
Other liabilities	69		6			75
Total Liabilities Assumed	3,496		80			3,576
Net identifiable assets acquired	729		—			729
Goodwill [2]	723		—			723
Net Assets Acquired	$	1,452	$	—		$	1,452


[1]	Includes $45 of cash received from Aetna in October 2018 in settlement of the final balance sheet and reported as a receivable in other assets in the Condensed Consolidated Balance Sheet as of September 30, 2018.


[2]	Approximately $610 is deductible for income tax purposes.

The effect of measurement period adjustments on the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2018 was immaterial and was determined as if the accounting had been completed as of the acquisition date.

The following table presents supplemental pro forma amounts of revenue and net income for the Company for the three and nine months ended September 30, 2017, as though the business was acquired on January 1, 2016.

Pro Forma Results



	Three months ended September 30, 2017 [1]		Nine months ended September 30, 2017 [1]
Total Revenue	$	4,777	$	14,309
Net Income	$	249	$	619

[1]Pro forma adjustments include the revenue and earnings of the Aetna U.S. group life and disability business as well as amortization of identifiable intangible assets acquired and the fair value adjustment to acquired insurance reserves. Pro forma adjustments do not include retrospective adjustments to defer and amortize acquisition costs as would be recorded under the Company’s accounting policy.