On December 18, 2019, it was released that New York Life Insurance Co. agreed to pay $6.3 billion for a Cigna Corp. unit that sells non-medical insurance products to employers.
New York Life Insurance Co. is one of the nation’s oldest and financially strongest life insurers. As low interest rates make life insurance and retirement-income annuities — New York Life’s central products — less attractive to consumers, the deal will help the New York insurer achieve its goal of expansion in a competitive marketplace.
For the Cigna unit, the deal is expected to help the health giant focus on its core business, which primarily focuses on selling group life insurance to midsize and large employers. With New York Life’s group life insurance business being smaller than that of Cigna, there is minimal overlap in its client base with New York Life’s existing group business. With that said, the acquisition will operate as a “self-standing unit, with Cigna employees transferring to New York Life.”
The deal will assist Cigna in reducing debt from its $54 billion acquisition of pharmacy-benefit manager Express Scripts Holding Co., which closed about a year ago.
Bill Smith, President of Cigna Group Insurance, says “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. 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.”
Closure of the acquisition is expected to take place in the third quarter of 2020, pending government approvals and closing conditions regarding the transaction.
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