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ACE Ltd. (NYSE:ACE) said Monday it would acquire Aon Corp.'s (AOC) Combined Insurance Co. unit and some other subsidiaries for $2.4 billion in cash. Combined provides specialty individual accident and supplemental health insurance to more than 4 million middle-income consumers in North America, Europe and Asia. The deal doubles ACE's personal-accident and supplemental-health offerings. ACE plans to finance the deal with cash on hand and "modest" new debt. Aon plans to extract a one-time cash dividend of $325 million from Combined before closing the deal. The companies hope to close the deal by the end of Q2.

"Combined’s sales force of nearly 7,000 agents will diversify our distribution for this class of business," ACE CEO Evan Greenberg said. "ACE has relied predominantly on direct response and brokerage, while Combined is a leader in captive agency distribution. We will export Combined’s franchise to the developing markets of Latin America, Asia Pacific and other promising regions of the world where we already have an established presence and where a growing middle class presents favorable conditions."

Separately, Aon also said it is selling its Sterling Life Insurance unit to Munich Re for $352 million. Sterling is a healthcare benefits provider to U.S. senior citizens. Its 2007 estimated revenue is $805 million in 2007. Its 155,000 members will complement Munich Re's existing U.S. life and health business, it said.

Aon CEO Gregory Case has been selling or shutting down units in order to simplify its business and underwrite less insurance, following previous CEO Patrick Ryan's more than 400 acquisitions. "Our core assets will now be more strategically aligned as we expand our capabilities to better serve our risk brokerage and consulting clients," CEO Greg Case said. ACE shares closed Friday at $59.51; Aon shares closed at $48.94.

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Source: Aon Sells Two Units, One to ACE, for $2.75B