NEW YORK and BLOOMFIELD, Conn., December 18, 2019 - New York Life and Cigna announced today that they have entered into a definitive agreement for New York Life to acquire Cigna's group life and disability insurance business for $6.3 billion. The acquisition is expected to close in the third quarter of 2020, subject to applicable regulatory approvals and other customary closing conditions.
"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 Chairman and CEO Ted Mathas. "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. We are fully committed to making this transition as seamless as possible for employees and clients alike."
The group life and disability insurance business will operate within New York Life's portfolio of strategic businesses, which, like Cigna's Group Insurance business, are highly profitable, and fully support New York Life's core retail life insurance franchise. These businesses reinforce New York Life's overall financial strength by generating capital that can contribute to its surplus, dividends, and earnings, which directly benefits the company's policy owners. In addition, the Cigna Group Insurance employees, as well as the employees who primarily support the acquired business, will transfer to New York Life.
"We are proud of what we have achieved in our life and disability business, and the world-class team that powers it. We are confident that clients and customers, including the many who also receive health and related benefits through Cigna, will continue to enjoy the high-quality benefits solutions and service for which this business is known," said Matt Manders, Cigna's President of Strategy and Solutions.
"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," said William Smith, President of Cigna Group Insurance.
In a multi-year collaboration, following closing, the parties will continue to bring an integrated Health / Group offering to clients and prospects who desire it.
New York Life will pay Cigna cash consideration of $6.3 billion. The transaction is not subject to a financing condition at closing. Cigna expects to realize approximately $5.3 billion of net after-tax proceeds from this transaction. Cigna expects to utilize proceeds of the transaction for share repurchase and repayment of debt in 2020. Cigna's Board of Directors has increased the company's share repurchase authority by $3.0 billion to an aggregate amount of $4.0 billion.
Cigna expects the impact of the transaction to be neutral to earnings per share in 2020 and modestly accretive to earnings per share in 2021. Cigna continues to expect to meet its deleveraging commitments made following the Express Scripts combination.