New York Life Buys Group Disability Business from Cigna
New York Life Insurance Company has agreed to buy Cigna’s group life and disability insurance business for $6.3 billion. Cigna also engaged in talks with MetLife, Inc. and SunLife Financial Inc. before closing the deal with New York Life Insurance Co. in December.
Cigna reports that the proceeds will be used in 2020 for share repurchase and repayment of debt. Cigna’s debt load rose to over $40 billion after its $67 billion takeover of Express Scripts, a pharmacy-benefits manager, last year. The unit being sold generated $5.1 billion of adjusted revenue last year.
New York Life is the largest mutual life insurance company in the U.S. and it currently offers life insurance, retirement income, investments, and long-term care insurance. This deal will make New York Life one of the largest providers of non-medical insurance for group benefits programs.
Group businesses like Cigna’s can be attractive to insurance companies looking to diversify, and it is not unusual for insurers to sell portions of their businesses (including group and/or individual disability insurance policies) to other insurers or turn these businesses over to third-party administrators. Both scenarios can change how claims are administered. In this instance, Cigna and New York Life will engage in a multi-year collaboration, and Cigna employees involved in the Group Insurance block will transfer to New York Life.
Sources:
New York Life to Acquire Cigna’s Group Life and Disability Insurance Business, Cigna Newsroom, Dec. 18, 2019
New York Life to acquire Cigna’s group life and disability insurance business, New York Life Newsroom, Dec. 18, 2019
Katrina Nicholas, New York Life to Buy Cigna Unit in $6 Billion-Plus Deal, FT Says, Bloomberg, Dec. 17, 2019
Alicja Grzadkowska, Confirmed: New York Life will buy $6 billion Cigna unit, Insurance Business America, Dec. 18, 2019
