Cigna Corporation (NYSE: CI), a global health-service company, will repurchase $3.5 billion in common stock through accelerated stock repurchase agreements with two counterparties, Mizuho Markets Americas LLC and Morgan Stanley & Co. LLC (the “Counterparties”). These ASR agreements are part of Cigna’s share repurchase program having the remaining authority of around $8.8 billion as of June 14, 2022.

David M. Cordani, the Chairman and Chief Executive Officer of Cigna, said, “This accelerated share repurchase is part of our ongoing commitment to return significant value to our shareholders. Our ability to execute against our capital deployment priorities is a testament to our business’s ongoing growth and strength and our ability to generate strong cash flow. When combined with our previously completed share repurchase, we remain on track to repurchase at least $7 billion of our shares in 2022.”

Cigna will receive an initial aggregate delivery of shares equal to 80% of the prepayment amount of $3.5 billion under the terms of the ASR agreement. This initial delivery will be done on July 6, 2022, and will be based on the share price of Cigna when the market closes on July 1, 2022. The exact number of shares that Cigna will ultimately repurchase will be based on the daily average share price of the Cigna common stock throughout the agreement, although subject to adjustment in the ASR Agreements. The final settlement of the payment as agreed under the ASR is expected to happen in the fourth quarter of 2022.

The ASR agreement is no different from other ASRs of this type as it also contains provisions for changes to the transaction terms upon the occurrence of certain specified events or other circumstances that might cause the final settlement of the ASR Agreements to be accelerated, extended or terminated by Cigna or the Counterparties. It also contains various acknowledgements and representations made by the parties to each other.

Under the ASR Agreements, if the public announcement of the first closing of the company’s previously announced sale of its life, accident and supplemental benefits businesses in several countries to Chubb INA Holdings Inc. does not occur on or before July 1, 2022, the ASR agreements shall be canceled. Also, all the shares delivered to Cigna under this agreement will be held in treasury or retired. 

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