(Adds shares, analyst quote, details on suspension of share buyback)
Oct 23 (Reuters) - Hartford Financial said on Monday it would buy health insurer Aetna Inc's U.S. group life and disability business for $1.45 billion cash in a move that will expand its insurance portfolio and spur its digital technology plans.
However, shares of Hartford were down as much as 5 percent at $53.63 after the insurer said it would suspend its buyback to fund part of the deal.
The insurer will also use dividends from its insurance units and holding company resources and will not issue debt or equity for the purchase.
The company also said it would not buy back shares next year.
"Hartford is financing the deal by dividends and clearly mentioned that it will not authorize an equity repurchase plan for 2018, driving the shares down," Atlantic Equities analyst John Heagerty said.
Hartford will have more than 20 million customers following the deal and stretch its reach in offering workers' compensation to more mid-size and large companies.
The deal will also give Hartford access to Aetna's digital assets to improve its workers' compensation and disability claims processes. The assets include an integrated absence management platform.
Hartford is the 13th-largest property and casualty (P&C)insurer in the United States with a market share of 1.83 percent, according to the National Association of Insurance Commissioners (NAIC), a multi-state insurance regulatory body.
Hartford's group benefits business took in $803 million as premium at the end of the third quarter, which is 23 percent of the company's total premium earned.
The group benefits business of Hartford reported core earnings of $66 million in the third quarter.
Aetna's group life and disability insurance unit had premiums of about $2 billion in 2016.
The acquisition, which is expected to close in early November, would add to Hartford's earnings in 2018.
Aetna will use the proceeds for share repurchases and repay debt.
The health insurer will also offer Hartford's group life and disability products through its medical sales team. (Reporting by Diptendu Lahiri in Bengaluru; Editing by Sai Sachin Ravikumar and Martina D'Couto)