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substantial business reasons by way of a tax-free reorganization
under section 368. As the culmination of the reorganization,
CIGNA was incorporated on March 31, 1982, as the holding company
for the surviving affiliated business entities.
In years prior to the combination of the CG and the INA
Groups, INA and its affiliates had filed consolidated Federal
income tax returns, with INA as the common parent corporation of
the affiliated INA Group. Members of the INA Group were engaged
primarily in selling, underwriting, and servicing P&C insurance.
The reorganization involving the CG and the INA Groups was
treated as a reverse acquisition under section 1.1502-75(d)(3),
Income Tax Regs. After the reorganization and for Federal income
tax purposes, the CG Group was treated as continuing in existence
and the INA Group was treated as ceasing to exist. CIGNA was
treated as the common parent corporation of the continuing CG
Group (the CIGNA Group), and companies that constituted members
of the former INA Group became members of the CIGNA Group.
Acquisition of PHC
On November 20, 1984, an affiliate of CIGNA acquired 89.9
percent of the stock of Preferred Health Care, Inc. (PHC), in a
taxable transaction. As a result of this transaction, PHC and
its subsidiary companies (the PHC Group) terminated, and
companies that constituted members of the former PHC Group became
members of the CIGNA Group.
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