Coventry Health Care Inc. is paying $120 million to acquire Mutual of Omaha Insurance Company’s employer-based group health insurance business as well as its federal employees health benefits business.

The all-cash sale involves Mutual of Omaha’s major medical coverage in Nebraska and Iowa in addition to the federal health benefits. Mutual’s group health clients outside Nebraska and Iowa will be dropped, the companies say.

Mutual and Coventry expect to close on the deal in 60 to 120 days.

Most Mutual employees involved in the affected businesses will move to Coventry, which plans to expand in Omaha while maintaining Mutual’s existing service centers in Aberdeen, S.D., and Charlotte, N.C., the companies say.

Mutual says it will immediately stop selling group health insurance. It will continue to offer group life, disability, dental and supplemental health insurance; retirement plans; stop-loss coverage; and voluntary insurance products.

Mutual is pulling out of the group health care market because “significant investments would be required to build the technology needed to support the next generation of consumer-driven health products,” Mutual Chairman Dan Neary says in a statement about the deal. “Yet this investment would not mitigate the market forces we face.”