ING Groep of Amsterdam has signed a definitive agreement to buy Aetna Financial and Aetna International of Hartford for $7.7 billion - $5 billion in cash plus the assumption of $2.7 billion of Aetna's total $5 billion of debt.

ING said the purchase would make it the largest deliverer of life insurance and annuity policies in the U.S. With the acquisition, it will have $176 billion in mutual fund and insurance assets under management and $20.2 billion in annual insurance premium income.

Aetna brings 1.8 million customers to the merger with $77 billion in assets under management, according to Aetna.

The transaction is expected to close by the end of the year.

As part of the deal, Aetna is also spinning off its healthcare business to shareholders as a separate company. Aetna said it hoped that its financial service and healthcare businesses would grow more rapidly as separate businesses.

The purchase of the strong Aetna brand name makes sense for ING, which is intent on becoming one of the top 10 retirement service companies in the U.S. over the next five years, said Dennis Dolego, director of research at Optima Group, a mutual fund consulting firm in Fairfield, Conn.

ING and other European companies are also likely to continue to acquire U.S. asset management and insurance companies since they view them as growing businesses with retirement-service expertise that does not exist in Europe, Dolego said.

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