SINGAPORE: New York Life Insurance Co. has agreed to acquire a business from Cigna Corp. that sells non-medical insurance products to employers in a transaction worth north of $6 billion, the Financial Times reported Wednesday, citing people familiar with the matter.
The acquisition would broaden New York Life’s offerings beyond its core life insurance and annuities franchises. It would also provide a large cash injection to Cigna, saddled with debt following its $67 billion takeover of pharmacy-benefit manager Express Scripts last year, according to the report.
Health-insurance giant Cigna had been talking to other would-be bidders including MetLife Inc. and Sun Life Financial Inc., other people familiar with the negotiations said earlier this month. The Cigna business markets insurance products such as life, accident and disability-income policies.
Insurers have been striking deals for units that sell insurance through employers. In 2018, Lincoln National Corp. bought a group-benefits business from Liberty Mutual Holding Co. for $3.3 billion, while Hartford Financial Services Group Inc. acquired an Aetna Inc. life and disability business in 2017.
Such businesses are attractive to insurers seeking to diversify. That’s because the units are less capital intensive, don’t rely as much on investment income, and provide cash flow, Evercore ISI analysts wrote in an August note, after initial reports that Cigna was looking to sell the business.
The deal is expected to be announced later Wednesday, according to the FT.
Cigna, based in Bloomfield, Connecticut, has been working to trim debt after swallowing Express Scripts. Its debt load swelled to more than $40 billion after the deal. Cigna is also locked in a legal battle with Anthem Inc. after a planned combination of the two companies was derailed by antitrust concerns.
New York Life, founded in 1845, doesn’t trade publicly; it’s a mutual company owned by its policy holders. It is one of the largest insurers in the U.S. and one of the few remaining mutuals. The deal with Cigna would make it one of the largest providers of non-medical insurance for group benefit programs, according to the FT. - Bloomberg