Reinsurer Munich Re said Monday it reached a deal to buy U.S. healthcare insurer Sterling Life Insurance for $352 million (242.61 million euros) in cash, giving it more access to older Americans who want to buy health insurance.
Under the terms of the deal, the Munich-based company will acquire Bellingham, Washington-based Sterling Life through its Munich-American Holding. The deal remains subject to regulatory approval, but is expected to be complete during the first quarter of 2008.
The deal "further strengthens our capabilities as a global provider of integrated health care management," said Wolfgang Strassl, who oversees life and health care issues for the Munich-based reinsurer.
Sterling has about 155,000 members and provides coverage for customers who are 50-years-old and older. The company operates 41 offices across the U.S. and is licensed in 49 states and Washington D.C. Its estimated sales for 2007 are expected to be $805 million (554.83 million euros).
Sterling has a strong presence in what Munich Re called "the growing Medicare Advantage market. Its product portfolio also includes Medicare supplement and complementary products for seniors." The senior market is one of the fastest-growing in U.S. health care as the Baby Boom generation continues to age.
"This combination will allow Sterling members to benefit from the wide range of capabilities within Munich Re and creates more opportunities to develop the Sterling brand," said Debbie Ahl, Sterling Life's president and CEO. "The acquisition of Sterling by Munich Re will allow us to expand our business."
Munich Re is the world's No. 2 reinsurer behind Swiss Re. Reinsurance companies sell backup coverage to other insurers, spreading risk so the system can handle huge losses from major disasters. Munich Re was overtaken as the largest in the industry last year when Swiss Re completed its takeover of General Electric's (GE is the parent company of CNBC) reinsurance operations.
Shares of Munich Re fell less than 1 percent to 128.73 euros ($186.77) in Frankfurt trading.