Under the terms of the transaction, CIGNA will receive cash consideration amounting to approximately $170 million. An estimated after-tax gain of $75 million will be recognized over the remaining life of the reinsured business (approximately 10 to 15 years).
The transaction has an effective date of June 1, 2000. Revenues of the businesses being sold were approximately $100 million in 1999, with operating income for the same period of $15 million (operating income is net income excluding after-tax realized investment results).CIGNA is retaining its other lines of reinsurance, which include global accident, domestic health, international life and health, and specialty life. These lines will be placed in runoff.
As previously disclosed, CIGNA is reviewing the reserve assumptions for the liabilities associated with specialty life minimum death benefit contracts. Any charges resulting from this review could adversely affect CIGNA’s results of operations, but CIGNA does not expect them to be material to its liquidity or financial condition.
“This divestiture further sharpens our focus on CIGNA’s employee benefits businesses: employee health care, life and disability benefits; and retirement and investment products and services,” said CIGNA chief executive officer H. Edward Hanway.
CIGNA Corporation’s subsidiaries are leading providers of employee benefits in the United States and serve selected international markets. As of December 31, 1999, CIGNA Corporation had consolidated revenues of $18.8 billion, consolidated assets of $95.3 billion and shareholders’ equity of $6.1 billion.
Was this article valuable?
Here are more articles you may enjoy.