Via Financial Times

New York Life Insurance has agreed to pay more than $6bn to purchase a Cigna unit that sells employers non-medical insurance products, according to multiple people briefed on the negotiations.

The takeover will broaden New York Life’s offerings beyond its core life insurance and annuities franchises. It also will provide a significant cash injection to Cigna, which was laden with debt after its $67bn takeover of pharmacy-benefit manager Express Scripts last year.

The deal is expected to be announced on Wednesday, the people said.

The group disability and life business unit that is up for sale provides companies, non-profit organisations and other groups with accident, disability and life insurance plans that they can offer to their employees. The business attracted several other potential buyers including MetLife and SunLife Financial.

New York Life, founded in 1845, is one of the largest insurers in the US. It does not trade publicly; it is a mutual company owned by its policyholders.

Ted Mathas, chief executive, has moved to diversify New York Life since he assumed his role atop the mutual company in 2008. In 2013, the group bolstered its investment management business with the acquisition of Dexia’s asset management arm for more than $500m. Over the past several years, it has bought small stakes in a number of financial technology companies.

The group is known for its life insurance policies and thousands of insurance agents and it claims to be the largest seller of direct-to-consumer life insurance plans through its partnership with AARP, a US non-profit that advocates for older workers.

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The purchase of the Cigna unit would make New York Life one of the largest providers of non-medical insurance for group benefit programmes.

It also would help expand New York Life’s offerings at a time when the biggest companies in the industry are trying to cope with sliding interest rates and fend off stiff competition from venture-backed start-ups pushing into more traditional insurance offerings.

Cigna declined to comment. New York Life did not immediately respond to a request for comment.

Analysts at Citigroup said last week that at sale, which was reported by the Financial Times earlier this month, would give Cigna the “financial flexibility” to pay down some of its roughly $39bn of debt and could save the health insurer more than $200m a year in interest expenses.

The unit being sold to New York Life is part of one of Cigna’s smaller business lines, which generated $5.1bn of adjusted revenue last year — just over 10 per cent of the company’s $49bn of sales in 2018.