Health insurer Aetna has agreed to acquire Genworth Financial' member company Continental Life Insurance (CLI) of Tennessee for $290m.

Aetna said the transaction will substantially enhance its presence and capabilities as a provider of Medicare Supplement insurance and adds 145,000 members.

Medicare supplement insurance covers deductibles, co-payments and other expenses not covered by Medicare, CLI also offers ancillary products such as accident & health and final expense coverages.

The transaction is expected to funded with the available resources. It also expects to maintain the business’ current management, staff and operations, which are primarily based in Tennessee.

Aetna chairman, CEO and president Mark Bertolini said this important growth opportunity comes at a time when the Medicare population is anticipated to increase as ‘Baby Boomers’ reach age 65.

Aetna senior executive vice president and CFO Joseph Zubretsky said Aetna brings capabilities to grow the Medicare Supplement business, including access to commercial retirees and Medicare Prescription Drug Plan members, multi-channel distribution and other Aetna product offerings.

Insurer said the transaction will be treated as an asset purchase for tax purposes. It subject to subject to customary closing conditions and is expected to close by the fourth quarter of 2011.