A Potential Pru-Cigna Deal Gets Positive Reviews
Analysts generally were positive about reports that Prudential Financial is in negotiations to buy CIGNAs retirement services business for about $2 billion.
At press time, Prudential, Newark, N.J., and CIGNA, Philadelphia, declined comment on the reports.
The retirement businesses of both insurers serve the qualified and nonqualified markets. Prudentials defined contribution offerings include the 401(a), 401(k), 403(b), 457 and Taft-Hartley markets. It also offers GICs, funding agreements and group annuities.
In 2002 net sales were $610 million and adjusted operating income, $141 million.
CIGNA offers both defined benefit and defined contribution pension plans, profit-sharing plans and retirement savings plans.
At year-end 2002, CIGNAs retirement operations had total deposits of $8.77 billion, which included $5.58 billion from defined contribution plans, $1.99 billion from defined benefit plans and $61 million from other products including GICs. Total operating earnings in 2002 were $231 million.
In a written report, Andrew Kligerman of UBS, New York, says the combination would complement Prudentials existing retirement operations, adding not only greater scale but also CIGNAs “defined benefit outsourcing capabilities.”