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Health care industry

Travelers Group Completes Sale of MetraHealth Stake for $831 Million

Strategic Insights

— 1 min read

Travelers Group, one of the nation's largest diversified financial services companies, has completed the sale of its 48.25% stake in The MetraHealth Companies, Inc. to United HealthCare Corporation, a Minneapolis-based health insurance provider. The sale, valued at $831 million, marks a significant milestone for Travelers Group as it focuses on growing its core financial services businesses. The gain from the sale, excluding a potential contingency payment, will be approximately $100 million, strengthening the capital base of Travelers Insurance Company.

Key Takeaways:

  • Travelers Group has completed the sale of its 48.25% stake in The MetraHealth Companies, Inc. to United HealthCare Corporation for a total consideration of $1.65 billion.
  • The sale includes a cash payment of $831 million, with the potential for an additional $169 million in cash if a 1995 contingency payment is made.
  • United HealthCare will also pay up to an additional $350 million to Travelers Group and Metropolitan Life Insurance Company if MetraHealth achieves certain 1995 operating results.
  • The gain from the sale, excluding a potential contingency payment, will be approximately $100 million, available in the fourth quarter of 1995.
  • The sale allows Travelers Group to focus management attention on growing its core financial services businesses, such as investment and consumer finance services, life and property and casualty insurance.
  • United HealthCare will pay up to an additional $350 million to Travelers Group and Metropolitan Life Insurance Company if MetraHealth achieves certain 1995 operating results, as well as other contingency payments in 1996 and 1997.

Statistics:

  • $831 million: Cash payment received by Travelers Group from United HealthCare Corporation for the sale of its stake in MetraHealth.
  • 48.25%: Venture ownership of Travelers Group in MetraHealth before the sale.
  • 1995: Year in which Travelers Group will participate in a contingency payment of up to $169 million.
  • $100 million: Gain from the sale, excluding the potential contingency payment.
  • 1995: Year in which United HealthCare will pay up to an additional $350 million to Travelers Group and Metropolitan Life Insurance Company if MetraHealth achieves certain operating results.

Sources:

  • "Travelers Group Completes Sale of MetraHealth Stake" (Travelers Group press release, October 3, 1995)
  • "MetraHealth Announces Completion of Sale of Companies to United HealthCare Corporation" (MetraHealth Companies, Inc. press release, October 3, 1995)
  • "Travelers Group Reports Third Quarter Results" (Travelers Group press release, October 2, 1995)

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