First, there was news in August 2019 that US health insurance giant, Cigna Corp, was allegedly seeking buyers for its group benefits insurance business, which was valued at around $6 billion. Now, the company has reportedly found a leading candidate for the acquisition of that unit in New York Life Insurance.
Other would-be bidders include MetLife and Sun Life Financial, according to sources familiar with the potential deal. The Cigna business markets insurance products, including life, accident and disability income policies.
This isn’t the first time that an insurer has struck a deal for a unit that sells insurance through employers. Lincoln National purchased a group benefits business from Liberty Mutual Holding in 2018 for $3.3 billion, while Hartford Financial Services Group bought an Aetna life and disability business back in 2017.
The reason for the interest is that the businesses are attractive to insurers that are looking to diversify. They’re less capital-intensive and don’t lean as heavily on investment income while also providing cashflow, according to insight from Evercore ISI analysts.
Cigna has been working to cut down its debt, which grew to more than $40 billion after the acquisition of pharmacy benefits manager Express Scripts Holding for $54 billion in 2018. An ongoing legal battle with Anthem after a planned merger of the two giants was halted by antitrust concerns is likewise weighing on the company.
A spokeswoman for New York Life declined to comment, stated reports from Bloomberg. A Cigna spokeswoman, meanwhile, said that the company doesn’t comment on rumor and speculation.
