Cigna, one of the nation’s largest health insurance providers, has agreed to sell its group disability and life insurance business to New York Life for a purchase price of $6.3 billion.
New York Life Insurance Company is a Fortune 100 company and is the largest mutual life insurance company in the U.S. The deal, which is an all-cash buyout, is expected to close in the third quarter of 2020, subject to regulatory approvals and customary closing conditions.
"This transaction increases the value we can deliver to our policy owners, strengthens our well-defined business model, and adds millions of customers to the New York Life family," said New York Life Chairman and CEO Ted Mathas. "Cigna's group life and disability business enhances our portfolio of strategic businesses and is led by an experienced management team and high-quality workforce, who we look forward to welcoming to our company. We are fully committed to making this transition as seamless as possible for employees and clients alike."
The transaction brings the group life and disability insurance business within New York Life’s portfolio of strategic businesses. Under terms of the deal, the Cigna Group Insurance employees and employees that support the acquired business will transfer to New York Life.
"We are proud of what we have achieved in our life and disability business, and the world-class team that powers it. We are confident that clients and customers, including the many who also receive health and related benefits through Cigna, will continue to enjoy the high-quality benefits solutions and service for which this business is known," Matt Manders, Cigna's president of strategy and solutions, said in the statement.
Cigna closed on its $67 billion acquisition of pharmacy benefit manager Express Scripts in December 2018. The company expects to use the proceeds from the sale to repurchase shares and repay debt in 2020. The board of directors has already upped the company’s share repurchase authority from $3 billion to $4 billion. The sale is expected to be neutral to earnings per share in 2020 and accretive in 2021.
"Our team is excited to become a part of New York Life and continue to focus on the mission of providing financial security and peace of mind to individuals, families, and businesses across the country while our unwavering commitment to focusing on productivity will continue," William Smith, president of Cigna Group Insurance, said in a statement. "We look forward to continuing our relationships with our valued customers and clients. New York Life is a highly-respected brand in our industry and has the capital, commitment, and trust to help us grow and thrive going forward."
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."