With a significant position in the US health insurance market, CIGNA covers some 11.5 million Americans with its various medical plans. The firm's offerings include PPO, HMO, point-of-service (POS), indemnity, and consumer-directed products, as well as specialty coverage in the form of dental, vision, pharmacy, and behavioral health plans. It also sells group accident, life, and disability insurance. Customers include employers, government entities, unions, Medicare recipients, and other groups and individuals in North America. Internationally, CIGNA sells life, accident, and health insurance in parts of Europe and Asia, and it provides health coverage to expatriate employees of multinational companies.
While CIGNA's North American health plan operations still account for a majority of revenue, the company's diversified businesses (including international operations) have grown to account for about 40% of sales.
CIGNA's disability and life insurance operations, which account for about 15% of sales, offer long- and short-term disability, group life, and accident insurance, among other products. The company covers about 5.2 million lives with its group life insurance policies and about 5.8 million individuals with its group disability policies.
Other operations include a mail-order pharmacy business, which works in partnership with its health care services segment, and an operator of onsite health clinics for large employer groups. CIGNA also still receives revenue from two inactive business lines: Its runoff retirement benefit business and its runoff reinsurance business. (These segments service existing policies but don't issue new policies.)
In addition its domestic operations -- which cover all 50 US states plus Washington DC and the Virgin Islands -- CIGNA sells supplemental life, accident, and health insurance to some 7 million members in international markets (about 30 countries). South Korea is the firm's largest foreign market, generating about 30% of its international segment revenues. CIGNA is also one of the world's largest providers of expatriate health insurance, which covers the overseas employees of multinational corporations. The company serves more than 1 million expatriate members.
Marketing and Sales
CIGNA does much of its health plan business with large employer groups, mainly through direct sales representatives and independent consultants. The company is working to expand its customer base to include more select (50 to 250 employees) and midsized (250 to 5,000 employees) businesses, government entities, and individuals.
The North American life and disability segment markets policies to employer groups and other professional associations through a network of brokers and consultants, while international health and life policy sales are conducted via independent distributors.
CIGNA has maintained a healthy balance between growth and cost-control efforts in recent years, leading to steady increases in revenues. In 2011 the company reported a 4% gain in sales to some $22 billion, largely due to expansion in the midsized and select commercial health plan markets, as well as growth in the international segment. However, net income levels have been slow to rise for CIGNA, and 2011 came with a profit decline of 1% to $1.3 billion due to losses in the runoff segment.
In addition to adding new corporate accounts, CIGNA is trying to grow its domestic health care segment by offering new and innovative products for individuals. For instance, the company is launching trendy consumer-directed programs such as low-deductable plans with health savings accounts (through its CIGNA Choice Fund line), incentive programs, health risk assessments, and online tools (such as Choicelinx and HealthEview) for comparing coverage options and making sound health care decisions.
CIGNA also continually works to strengthen its network of providers by forming strategic alliances with regional managed care organizations such as MVP Health Plan and Tufts Health Plan. As a means to improve care quality and lower medical costs, CIGNA is forming collaborative accountable care partnerships with regional providers such as The Palo Alto Medical Foundation.
CIGNA is working to mitigate rising health care costs through means such as entering favorable reimbursement contracts with providers and enhancing operating and administrative efficiencies. Pending health care reform measures and CMS reimbursement cuts have also prompted CIGNA to exit some of its health plan market segments, while pursuing growth in areas it perceives to be more profitable under new laws. For instance, the company withdrew its small group (2 to 50 employees) offerings in certain states during 2011 and 2012.
Internationally, the company is working to expand its geographic footprint, especially in emerging markets. For instance, in early 2012 CIGNA and India-based conglomerate TTK Group announced plans to sell health insurance products throughout India through a joint venture called Cigna TTK. In late 2012 the company formed a joint venture with Saudi Arabian Insurance Company, enhancing an existing partnership between the companies to establish health and wellness offerings in the Middle East.
Mergers and Acquisitions
To expand in the attractive individual marketplace for seniors, in 2012 the company acquired HealthSpring, a major Medicare Advantage provider, for some $3.8 billion. The purchase strengthened CIGNA's presence in the individual seniors market by adding a Medicare Advantage business that covers 340,000 members in 11 states, as well as a Medicare prescription drug plan covering 800,000 customers. To further grow its senior operations, later that year CIGNA acquired the supplemental benefits operations -- consisting of supplemental Medicare and illness policies serving 200,000 customers -- of American Financial Group for some $305 million.
CIGNA expanded its European supplemental policy operations in late 2011 when it acquired UK-based FirstAssist Insurance Services from Barclays Private Equity for some $115 million. The deal added travel, health, and legal protection insurance offerings to its product line, as well as some 3 million members in the UK market. – less