(Credit: New York Life)
New Life Insurance Company today announced plans to pay $6.3 billion, in cash, for Cigna Corp.'s group life and disability businesses.
New York Life would get Cigna's Life Insurance Company of North America and CIGNA Life Insurance Company of New York's subsidiaries, according to a deal analysis from analysts at Fitch Ratings.
New York Life and Cigna hope to close on the deal by Sept. 30, 2020.
New York Life is a policyholder-owned mutual insurer that has focused mainly on the individual life and annuity markets.
Cigna is a publicly traded insurer based in Bloomfield, Connecticut. Cigna has talked for years about the value of integrating its large group health operations with its group disability plans, but the company recently took on debt to pay for the $54 billion acquisition of Express Scripts, a large pharmacy benefits manager.
Cigna ended the third quarter with about $34 billion in long-term debt.
Dean Ungar, a vice president at Moody's Investors Service, said in a comment that Cigna's group business is a solid business with high profit margins, but that the unit accounts for less than 10% of the company's earnings, and that, in the wake of the Express Scripts deal, one of Cigna's top priorities has been reducing its ratio of debt to operating income.
