This is due to the usual accounting practice of not acknowledging ALL liabilities and reserving for it by the carrier. In the overall scheme of things in M&A activity for CIGNA, ACE, and the current carrier $14 million is peanuts. Breach of contract and expecting the liability to somehow go away is arrogance.
Due diligence by both parties in an acquisition will reveal such anamolies before the deal is closed. The buyer should perform an audit and verify at least some of the information with the policyholders as is done in a normal statutory audit.
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This is due to the usual accounting practice of not acknowledging ALL liabilities and reserving for it by the carrier. In the overall scheme of things in M&A activity for CIGNA, ACE, and the current carrier $14 million is peanuts. Breach of contract and expecting the liability to somehow go away is arrogance.
Due diligence by both parties in an acquisition will reveal such anamolies before the deal is closed. The buyer should perform an audit and verify at least some of the information with the policyholders as is done in a normal statutory audit.