This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Cigna Announces Transaction To Exit Run-off Operations

Cigna Corporation (NYSE: CI) today announced a definitive agreement with Berkshire Hathaway Life Insurance Company of Nebraska, a member of the Berkshire Hathaway, Inc. group (Berkshire), under which Berkshire will reinsure Cigna's Run-off Guaranteed Minimum Death Benefits (VADBe) and Guaranteed Minimum Income Benefits (GMIB) businesses effective February 4, 2013. Cigna will fund this transaction with an incremental $100 million of parent company cash, approximately $1.8 billion of investment assets supporting the run-off businesses, and an estimated $300 million tax benefit associated with the transaction.

Berkshire will assume 100% of Cigna's exposure up to $4 billion of future VADBe and GMIB claims, which is significantly in excess of current projections of future claims for this business. Cigna believes that the potential for actual claims to exceed the limit of the coverage from Berkshire is extremely remote.

“Cigna is taking this definitive strategic step to further reduce risk and continue to improve our financial flexibility,” said David M. Cordani, President and Chief Executive Officer. “This transaction effectively eliminates potential capital calls and income statement volatility from these run-off books of business.”

Cigna expects to record the exit transaction as a special item in the first quarter of 2013, resulting in an after-tax charge of $500 million. The charge represents the amount of payment to Berkshire that is in excess of Cigna's recorded reserves. Realized capital gains resulting from the sale of investment assets supporting the business are expected to range between $50 million and $150 million after-tax, depending on whether the assets are sold externally or transferred to other internal portfolios.

The special item charge for the exit transaction and the expected realized capital gains on the sale of assets will be included in Cigna's net income, but will not be included in adjusted income from operations. As a result, Cigna's earnings outlook for 2013, which is based on adjusted income from operations, will not be impacted by this transaction. The transaction also does not affect Cigna's outlook regarding capital that is available for deployment in 2013.

1 of 4

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,979.13 +59.54 0.35%
S&P 500 1,986.51 +4.91 0.25%
NASDAQ 4,526.4820 -1.0320 -0.02%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs