What is an Accelerated Share Repurchase (ASR) agreement?

An Accelerated Share Repurchase (ASR) agreement is a contract where a company buys back its own stock from a financial institution. The company typically pays an upfront amount, and the financial institution delivers a portion of the shares immediately. The final number of shares repurchased is determined at a later date based on the average trading price of the stock over a specified period, often at a discount.

What is the condition for the $3.5 billion share repurchase to proceed?

The share repurchase is contingent upon the public announcement of the closing of Cigna's sale of its life, accident, and supplemental benefits businesses in several countries to Chubb INA Holdings, Inc. occurring on or before July 1, 2022. If this condition is not met by that date, the ASR agreements will be cancelled.

When will Cigna receive the shares from the repurchase, and how will the final amount be determined?

Cigna will receive an initial delivery of shares on July 6, 2022, valued at 80% of the $3.5 billion prepayment. The final number of shares will be determined by the volume-weighted average price of Cigna's common stock during the term of the transactions, less a discount, and may be subject to further adjustments. Final settlement is expected in the fourth quarter of 2022.

How does this share repurchase relate to the sale of international businesses?

The share repurchase is linked to the divestiture of Cigna's international life, accident, and supplemental benefits businesses. The execution of the $3.5 billion ASR is conditional on the successful closing of this sale by July 1, 2022, suggesting that the company intends to utilize proceeds from the sale to return capital to shareholders through share buybacks.

CI 8-K SEC Disclosure — Jun 16, 2022

Summary

Cigna Group (CI) announced on June 16, 2022, that it has entered into Accelerated Share Repurchase (ASR) agreements totaling $3.5 billion. This significant buyback initiative is part of the company's existing share repurchase program and demonstrates a commitment to returning capital to shareholders. The execution of these ASR agreements is contingent upon the closing of Cigna's previously announced sale of its life, accident, and supplemental benefits businesses in several international markets to Chubb INA Holdings, Inc., with a deadline of July 1, 2022, for this sale to be announced as closed. The initial delivery of shares under the ASR agreements is expected on July 6, 2022, representing 80% of the total repurchase value. The final number of shares repurchased will be determined by the volume-weighted average price of Cigna's stock during the transaction period, with potential adjustments. This strategic move signals management's confidence in the company's valuation and its ongoing capital allocation strategy, particularly in conjunction with the anticipated proceeds from the international business divestiture.

Key Highlights

1Cigna entered into Accelerated Share Repurchase (ASR) agreements for $3.5 billion of its common stock.
2This ASR is part of Cigna's existing share repurchase program.
3The ASR agreements are conditional on the closing of the previously announced sale of its life, accident, and supplemental benefits businesses to Chubb INA Holdings, Inc. by July 1, 2022.
4The company will receive an initial delivery of shares on July 6, 2022, valued at 80% of the $3.5 billion prepayment.
5The final number of shares repurchased will be based on the volume-weighted average price during the transaction period, with potential adjustments.
6Final settlement of the ASR is expected in the fourth quarter of 2022.

Cigna Group 8-K Report, Corporate Update (Jun 16, 2022)

Summary

Key Highlights

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