Chubb Limited (NYSE:CB) definitive agreement to acquire A&H and life business in Six Asia-Pacific Markets and Interest in Cigna Finans Emeklilik ve Hayat A.S. from Cigna Corporation (NYSE:CI) and Cigna Nederland Gamma B.V. for $5.8 billion.
The transaction is subject to required regulatory approvals and customary closing conditions and the $5.75 billion cash consideration is not contingent upon financing, no shareholders' approval is required and Cigna expects to realize approximately $5.4 billion of net after-tax proceeds from this transaction. The transaction is expected to be completed in 2022. Korea deal is likely to close first in 2022. The transaction is expected to close in the second quarter of 2022. Cigna expects to utilize the proceeds from the transaction primarily for share repurchase, broadly consistent with Cigna's capital deployment framework. The impact of the transaction is expected to be neutral to slightly dilutive to Cigna's earnings per share in 2022. Upon close, the transaction is expected to be immediately accretive to Chubb's core operating earnings per share and return on equity (ROE) for full-year 2023 by 6% and approximately 55 basis points, respectively. Deal ROE goes from 11% to 14% over five years after PGAAP adjustments. The company also expects a strong return on investment (ROI), with a three-year ROI of 15% and an IRR of approximately 20%. The tangible book value per share dilution is expected to earn back within six months. There is strong, steady cash generation with high dividend payout capacity of approximately 70% of operating income. The company will maintain its strong balance sheet and does not expect the transaction to impact its current AA investment grade rating or its capital management commitments, including its current share repurchase program and annual dividend.
Andrew Gerlach, Rodge Cohen, Joonkeun Yoo, Marc Treviño, David Spitzer, Mehdi Ansari, Michael Rosenthal and Joseph Matelis of Sullivan & Cromwell LLP acted as legal advisors to Chubb Limited. Wachtell, Lipton, Rosen & Katz LLP and Baker & McKenzie LLP acted as legal advisors to Cigna Corporation and Cigna Nederland Gamma B.V.. Ernst & Young Strategy and Transactions Limited acted as financial advisor to Cigna Corporation.