The high-value New York Life-Cigna M&A deal will mutually benefit both parties, says GlobalData

Following the announcement of agreement for acquisition of Cigna’s group life and disability insurance business by New York Life on 18 December 2019;

Aurojyoti Bose, Lead Analyst at GlobalData, a leading data and analytics company, offers his view:

“The acquisition of Cigna Corporation’s (Cigna) group life and disability insurance business by New York Life Insurance Company (New York Life), the leading mutual life insurance company in the US for US$6.3bn is the largest mergers and acquisitions (M&A) deal announced within the insurance sector in 2019.

“This acquisition is also the largest M&A by New York Life so far and forms a part of its strategy to further strengthen its presence and market share in life, accidental and disability insurance space. This acquisition will also allow Cigna to focus on its healthcare business, reduce debt levels and invest in its value-based business model.

“Following the acquisition of Express Scripts Holding Company for US$67bn in 2018, Cigna has been keen on divesting its group life and disability insurance business, and focus on its healthcare business. Moreover, Cigna was also under pressure to bring down its debt level that rose due to the acquisition of Express Scripts. Cigna’s total debt stood at US$38.8bn at the end of Q3 2019.

“Almost a decade ago, Cigna shifted its business model from volume-based traditional fee-for-service model to value-based health care delivery system that pays health care providers based on quality services. This also requires significant capital investment.”

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