Humana lost $790 million on its sale of KMG America Corporation earlier this month, according to statements filed with the Securities and Exchange Commission (SEC).
A deferred tax benefit of $430 million reduced the net loss to $360 million. Humana finalized the divestiture last week, funding it with a mixture of cash and statutory capital.
“This tax benefit will result in meaningful cash savings to the company and is greater than the sum total of the statutory capital and negative purchase price transferred to the buyer,” noted Humana CFO Brian Kane during the company’s second-quarter earnings call.
KMG—and the 30,000-plus people enrolled in its policies, which Humana sold under the brand Kanawha—is now in the hands of Texas-based Continental General Insurance Company, which is owned by HC2 Holdings, Inc. Continental General purchased KMG for about $400 million.
As it divested from KMG, Humana also entered into a series of agreements to cede its workplace voluntary benefit and financial protection products to ManhattanLife Assurance Company of America. However, these transactions did not impact cash holdings or short-term investments.
Kane suggested during the earnings call that Humana will devote much of its focus to its core products going forward. That said, it moved into the home health and hospice industries through acquisitions of Kindred Healthcare and Curo Health Services earlier this year.