A securities analyst at a unit of Citigroup Inc., New York, is speculating that a new federal income tax break could help CIGNA Corp., Philadelphia, find an acquirer.[@@]
The tax break, included in H.R. 4520, the foreign sales corporation and extraterritorial income exclusions bill, would suspend for 2 years a "policyholder surplus account" tax imposed by Section 815 of the Internal Revenue Code. Insurers have to pay the tax when they go through corporate restructurings or send dividends to parent companies, according to a note by Charles Boorady, an analyst at Citigroup Smith Barney, New York.
Both the House and the Senate have approved H.R. 4520, and President Bush has said that he will sign it.
CIGNA carries about $158 million in Section 815 tax liabilities on its books, and suspending the Section 815 tax for 2 years could make the company a more attractive acquisition target for Aetna Inc., Hartford, or UnitedHealth Group Inc., Minnetonka, Minn., Boorady writes.
