New York Life purchases Cigna unit

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New York Life Insurance Co. agreed to buy a Cigna Corp. business that sells life and disability insurance through employers for $6.3 billion in cash.

Cigna expects about $5.3 billion of net after-tax proceeds from the deal, the companies said in a statement. It will use the funds for share repurchases and repayment of debt.

“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,” New York Life Chairman and Chief Executive Officer Ted Mathas said in the statement.

New York Life joins insurers including Lincoln National Corp., which last year bought a group-benefits business from Liberty Mutual Holding Co. for $3.3 billion, and Hartford Financial Services Group Inc., which acquired an Aetna Inc. life and disability operation in 2017.

Such businesses are attractive to insurers seeking to diversify. That’s because the units are less capital intensive, don’t rely as much on investment income, and provide cash flow, Evercore ISI analysts wrote in an August note, after initial reports that Cigna was looking to sell the unit.

Bloomberg News