Global insurance carrier Chubb has agreed to acquire Cigna Corporation’s life, accident and supplemental benefits businesses in seven countries for a cash consideration of $5.75 billion.
Chubb Chairman and CEO Evan G. Greenberg noted that Cigna’s business is “overwhelmingly A&H,” and will help to “rebalance” its global portfolio in the Asia Pacific region.
Upon completion of the transaction, Chubb will acquire Cigna’s life, accident and supplemental benefits businesses in Hong Kong, Indonesia, Korea, New Zealand, Taiwan and Thailand as well as Cigna’s interest in a joint venture in Turkey.
In Korea, Chubb will acquire and plans to continue to operate the business under the LINA Korea (Life Insurance Company of North America Korea) brand.
Following the deal, Asia Pacific’s share of Chubb’s global portfolio will increase from $4 billion to $7 billion in premium and represent approximately 20% of the company (excluding China).
Together, A&H and life will comprise 21% of the company’s overall premium revenue compared to 14% today.
Cigna, meanwhile, will continue to operate its international health businesses globally, as well as local market services in the Middle East, Europe, Hong Kong, Singapore and its joint ventures in Australia, China and India.
“Our agreement with Chubb is another step forward in advancing our strategic focus on our global health services portfolio,” said David M. Cordani, President and CEO of Cigna Corporation. “We are proud of our success in building these life, accident and supplemental benefits businesses in Asia Pacific and improving the well-being and sense of security of our customers throughout the region.”
“We have long admired and respected Cigna’s business in Asia including its talented people, innovative products, technical and analytical capabilities, distribution and management,” added Greenberg.
“We know these businesses well as we already have a sizable operation of our own in the region and globally. These businesses produce very stable, high-quality earnings. The digital opportunity across the region is large and untapped and suitable for our direct-marketed A&H products and our consumer P&C and simple life insurance products. We are looking to the future. Broadly across the region, Chubb will be better able to capitalize on market and product opportunities with strong brand, complementary direct marketing skills and the cross-selling of Chubb’s non-life product to life customers.”
The transaction is currently expected to be completed in 2022, subject to applicable regulatory approvals and customary closing conditions.
It is not subject to a financing condition and Cigna expects to realize approximately $5.4 billion of net after-tax proceeds from this transaction, which will be used primarily for share repurchase, consistent with Cigna’s capital deployment framework.
Wachtell, Lipton, Rosen & Katz is serving as lead legal counsel, and Baker McKenzie is serving as lead regulatory counsel on the transaction.