New York Life Insurance, the third-largest life insurance company in the US has winded up 2020 by completing the purchase of the American health services organization Cigna’s unit, the biggest deal in its 175-year history.
The life insurance company headquartered in Newyork closed the $6.3 billion cash purchase of a Cigna group’s life, accident and disability insurance business, which was initially announced a year ago.
With the acquisition, Cigna’s unit which is operating as a standalone business will be renamed New York Life Group Benefit Solutions and will add nearly about 3,000 employees and over 9 million customers.
“This acquisition, the largest in our company’s history, reinforces our financial strength by generating capital,” New York Life chief executive Ted Mathas said in a statement. Such deals are a rarity for New York Life, which operates as a mutual insurance company owned by its policyholders.
“We are acquiring a great company that is a top-five player in this market that is going to enhance our capital generation and diversify our businesses and our risk. We are not a serial acquirer, so when we make acquisitions, we have to be thoughtful, methodical and purposeful about it. And this one fits perfectly.”
The company is among several life insurers that have made bets on businesses that sell policies through employers. Life insurers have increasingly gravitated towards group benefits because they are less sensitive to the low-interest rates that have been a drag on investment income for years.
The pandemic created some difficulties, delaying the deal’s completion by a quarter. COVID-19 also is likely to weigh on New York Life’s results in 2020 and next year because of higher mortality rates, still, the company is positive about the long-term benefit behind the acquisition.
New York Life Insurance
New York Life Insurance one of the largest mutual life insurance companies in the US, with its services in offering insurance, investment and retirement solutions. Founded in 1845, the company has about $593 billion in total assets under management and over $25 billion in surplus.
The US-based health services organization Cigna offer its services in medical, dental, disability, life and accident insurance and related products. The company was founded in 1982 as a result of the merger of the Connecticut General Life Insurance Company (CG) and Insurance Company of North America (INA) Corporation.