CIGNA To Acquire Group Operation From Power Corp. Unit (Corrected)

Acquiring Great-West Healthcare “will broaden our distribution reach and provider network in key geographic areas of the country, particularly the Western regions of the United States, and expand the range of health benefits and products we offer employers and their employees,” CIGNA Chairman Edward Hanway says in a statement about the deal.

Great-West Lifeco executives say they have agreed to sell the U.S. group insurance business as a result of the recent move to acquire Putnam Investments L.L.C., Boston, from Marsh & McLennan Companies Inc., New York, for $4.6 billion.

In addition to getting $1.5 billion in cash from CIGNA, Great-West Life & Annuity will be keeping $750 million it has invested in the U.S. business.

After paying taxes and writing off intangibles associated with the U.S. business, Great-West Lifeco should have about $1.6 billion in cash it can use to repay the loans used to finance the Putnam deal, Great-West Lifeco says.

Great-West Lifeco now has a total of about $336 billion in assets under management in the United States.

Once the CIGNA deal is completed, Great-West Lifeco will focus its U.S. efforts on expanding the financial services operations, according to Great-West Lifeco President Raymond McFeetors.

CORRECTED: An earlier version of this article incorrectly described the extent of the acquisition. CIGNA Corp. will be acquiring only Great-West Healthcare, not the rest of Great-West Life.