New York Life has agreed to spend more than $6 billion in cash for Bloomfield health insurer Cigna’s group life and disability insurance business, the companies announced Wednesday.
New York Life, the nation’s largest mutual life insurer, said the pending $6.3 billion acquisition will add millions of customers to its core retail life insurance franchise and will benefit policy owners by generating new capital contributing to its surplus, dividends and earnings.
Cigna will receive approximately $5.3 billion after taxes from the deal, which is expected to close in the third quarter of 2020, subject to customary closing conditions.
Cigna said it plans to use the proceeds to meet its debt obligations in 2020 after closing on its $67 billion acquisition of pharmacy-benefits manager Express Scripts last year.
An unspecified number of Cigna group insurance employees will transfer to New York Life after the deal closes, the companies said.
“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 CEO and Chairman Ted Mathas said in a statement.
He continued: “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.”
Cigna projects that the deal will be neutral to earnings per share in 2020 and grow in 2021.
Its share price was unchanged in pre-market trading Wednesday morning.