Malloy promises millions as CIGNA makes Bloomfield its HQ
Malloy promises millions as CIGNA makes Bloomfield its HQ
Tuesday, July 12, 2011
BLOOMFIELD -- Amid a backdrop of dreary economic news, Gov. Dannel P. Malloy today announced a "performance-based" economic-development package worth between $47 million and $71 million to grow and retain jobs at CIGNA Corp. as the health insurer declared Connecticut its corporate home.
"Our corporate headquarters, effective today, is Bloomfield, Conn.," said David Cordani, the chief executive officer of CIGNA, a Fortune 500 company with 30,000 global employees and $21.3 billion in annual revenues.
"I would to personally thank David, again, for the confidence he has placed in our state," Malloy said.
The announcement under a canopy on the lawn of CIGNA's sprawling campus here gave Malloy a chance to point to a quick payoff for his much-touted "First Five" economic development program, which offers incentives to the first five companies that create 200 jobs in the next 24 months.
The new jobs are not coming cheaply, but state officials say the deal with CIGNA represents a net-revenue gain for the state.
The benefits of economic development deals are notoriously hard to assess in the short-run, especially when a state is negotiating to retain jobs as well as grow new ones. Malloy said the structure of the deal is complicated, but the payout will be triggered by investments and hiring on CIGNA's part.
"There are a number of different metrics that are factored into it, but at the end of the day, it's all about being revenue positive," said Catherine Smith, the commissioner of economic development. "That's how I can sleep at night."
CIGNA is promising to create at least 200 jobs in the next two years, retain its 3,883 jobs in the state and make a minimum of $100 million in investments in its technology and real-estate infrastructure in return for a package of tax credits, a loan and job-training grants.
The governor in his remarks and CIGNA in its information kit gave different estimates for the value of the aid package.
Malloy described it as worth a maximum of $71 million: a $15 million loan, up to $50 million in tax credits and up to $6 million in job training grants. The Department of Economic Development says the minimum value was $47 million.
CIGNA estimated the worth to the company as between $50 million and $80 millio, assuming a minimum of 200 and a maximum of 800 new jobs.
Malloy said Connecticut was in competition with other states and countries for not only the jobs that are to be created, but possibly for the nearly 4,000 jobs CIGNA already has in Connecticut. The company also employees another 1,000 contractors in the state.
"I know that a number of other states and countries would have liked to have had what we have here today," Malloy said. "So, I want to say how happy I am that we will be working with CIGNA for a long, long time to come."
The number of jobs to be created most likely is less important politically to Malloy than was the concrete evidence that his outreach to the insurance industry is producing a working relationship. In a speech at Travelers after his election, Malloy promised to help the old-line insurers begin to grow again in the state.
Today, Malloy described coming to meet Cordani, who already lives in Connecticut, during the campaign and coming to know him as "a straight shooter" in their discussions since his election.
"Thank you for our budding relationship. I appreciate it very much," Malloy said.
Cordani returned the compliments, saying he applauded "the governor for engaging us." His comments echoed what industry representatives have been saying for months, that Malloy has repeatedly signalled his support for the business, even to the discomfort of some consumer advocates.
He looked to the industry for key appointees. Smith is a former top executive of ING, and the insurance commissioner, Thomas B. Leonardi, has an industry backgroud. More recently, Malloy vetoed an insurance-rate review bill favored by consumer groups and opposed by the industry.
Cordani said Malloy has created relationships.
"He created an enviroment of openness, of interest, of understanding what are the opportunties and the impediments to growth," Cordani said. "So, I felt good, as though we had a voice, and I felt positive we had a an opportunity to be heard."
Quotes like that from a Fortune 500 CEO are a welcome counter to complaints from the leadership of the legislature's Republican minority and the Connecticut Business and Industry Association that Connecticut remains hostile to business.
Two GOP legislators, Sen. Kevin Kelly of Stratford, the ranking member of the Insurance Committee, and Rep. Fred Camillo of Greenwich, the ranking member of the Commerce Committee, also spoke at the ceremony, giving it a bipartisan gloss. But the two minority leaders, Rep. Lawrence F. Cafero of Norwalk and Sen. John McKinney of Fairfield were not invited.
Roy Occhiogrosso, the governor's senior adviser, said the governor was careful not to over-play the CIGNA announcement. Unemployment remains at 9.1 percent, and it is likely to grow by two or three tenths of a percentage point if Malloy carries out a plan to lay off 6,500 state employees.
"It's a pretty big deal, but given the magnitude of the work that has to be done, crowing is the last thing he's going to do," Occiogrosso said.
Cordani praised the "First Five" program as public-private partnership that helped the company decide to invest in Connecticut at a time when it was being wooed globally for expansion.
Surrounded by legislative leaders, including House Speaker Christopher G. Donovan of Meriden and Senate President Pro Tempore Donald E. Williams Jr. of Brooklyn, Malloy then ceremonially signed the "First Five" legislation that Malloy says was tailored to help the state negotiate with CIGNA.
"Today is an opportunity to celebrate two things," Malloy said, linking the bill to the CIGNA deal.
CIGNA is the product of a merger three decades ago of Connecticut General Insurance and INA of Philadelphia. It has been based in Philadelphia since 1982. At the end of 2010, CIGNA had 65 million customers around the world and 11.4 million health-care cusomters in the U.S. About 80 percent of its medical customers are enrolled in self-insured plans.
Cordani said that today's announcement was not about declaring the winner of a competition of states trying to benefit from the consolidation of operations. The designation of Bloomfield as its headquarters will have a minimal impact on jobs in Philadelphia, he said.
"This is not about picking up all the jobs in Philadelphia and moving them into Connecticut," Cordani said. "This is about CIGNA growing our presence in Connecticut and growing our presence in Connecticut as we grow our business. So, that's the distinction."
That did not stop Malloy from interjecting with a smile, "From this day forward, I'm calling it CIGNA of Connecticut."