Aetna Inc. is paying $290 million to acquire a Medicare supplement insurance business and blocks of in-force Medigap business from Genworth Financial Inc.

Genworth, Richmond, Va. (NYSE:GNW), has been writing Medigap coverage through Continental Life Insurance Company, Brentwood, Tenn., and a Continental Life subsidiary, American Continental Insurance Company.

The Genworth Medigap business generated $317 million in net earned premium in 2010 by providing coverage for about 145,000 Medicare enrollees.

Aetna, Hartford (NYSE:AET), is acquiring 100% of the stock of Continental Life and using reinsurance agreements to acquire the in-force blocks, the companies say.

Aetna is using available resources to pay for the deal, the company says.

Aetna hopes to get the approvals it needs to complete the deal by the end of the year.

“Aetna expects to maintain the business’ current management, staff and operations,” Aetna says.

Genworth is selling to focus resources on its retirement and protection operations, according to Genworth Chairman Michael Fraizer.

“Looking ahead, we continue to actively pursue strategies that free capital for targeted redeployment and enhance shareholder value over time,” Fraizer says in a statement about the deal.

Aetna is acquiring Continental Life to expand its own Medigap business, Aetna says.

- Allison Bell

Other Medicare supplement insurance coverage from National Underwriter Life & Health: