With a significant position in the US health insurance market, CIGNA covers some 14.5 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 provides health coverage to expatriate employees of multinational companies. It is being acquired by rival Anthem.
Change in Company Type
In mid-2015 CIGNA agreed to be acquired by competitor Anthem for some $48 billion. The latest big move in a quickly consolidating industry, the deal will create a health insurance giant that serves more than 53 million people and generates about $115 billion in revenue. The companies anticipate that the acquisition will save money (nearly $2 billion in savings is expected) and better position the combined entity to take advantage of greater opportunities created by the Affordable Care Act.
CIGNA's subsidiaries include Connecticut General Life Insurance, Cigna Health and Life Insurance, Life Insurance Company of North America, and Cigna Life Insurance Company of New York.
CIGNA's largest segment is composed of its global health care operations, which account for about 80% of revenues and provide full health plan benefits for multinational, local, and organizational groups in North America and internationally. The division also provides behavioral health, employee assistance, pharmacy, and utilization review services to employer groups and benefit administrators.
CIGNA's disability and life insurance segment, which accounts for about 10% of sales, offers long- and short-term disability, group life, and accident insurance, among other products. The company covers more than 6 million lives with its group life insurance policies and more than 7.5 million individuals with its group disability policies.
A third segment, global supplemental benefits, provides supplemental health, accident, and life policies in the US and about 15 other countries.
Other operations include corporate-owned life insurance, run-off reinsurance business, and run-off settlement annuity business. (These businesses service existing policies but don't issue new policies.)
The company has more than 100 Collaborative Accountable Care Organization arrangements in 28 states covering 1.2 million customers. Global networks includes more than 1 million partnerships with health care providers and facilities.
In addition its domestic operations -- which account for 90% of revenues and cover all 50 US states plus Washington, DC; Canada; Puerto Rico; 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. 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 1.2 million expatriate members. In China, Turkey, and India, CIGNA operates through joint ventures.
In all, CIGNA operates in about 15 countries in North America, Europe, the Middle East, and the Asia/Pacific region.
The company's international properties include about 2.1 million sq. ft. in Belgium, Canada, China, France, Hong Kong, India, Indonesia, Kenya, Malaysia, the Netherlands, New Zealand, Singapore, South Korea, Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey, the United Arab Emirates, and the UK.
Sales and Marketing
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. At the end of 2014, its global health care sales force consisted of more than 1,250 representatives in more than 130 field locations.
The disability and life segment markets policies to employer groups and other professional associations through a network of brokers and consultants, while international health and life policy and supplemental benefit sales are conducted via independent distributors. Some supplemental products are marketed via direct telemarketing efforts.
The company's supplemental health, life, and accident policies sold abroad are generally marketed through distribution partnerships. These products are typically sold through direct marketing efforts such as telemarketing, television ads, online advertising, and in-branch bancassurance (partnerships with banks).
In 2014 the company took a minority stake in a joint venture which will offer CIGNA's products and services in India. In the US, it introduced a partnership with Cornerstone Health Care to provide improved services in North Carolina. Other new agreements signed that year include collaborations with Regional HealthPlus, Skylands Medical Group, and The Austin Diagnostic Clinic.
CIGNA has maintained a healthy balance between growth and cost-control efforts in recent years, leading to steady increases in revenues. In 2014 revenues rose 8% to $34.9 billion due to growth across all segments. Global health care revenue increased by 8% as the company raised commercial rates in response to federal health care reform. Fees and other revenues also increased that year. The global supplemental benefits segment grew on new sales, particularly in South Korea and the US, and particularly of higher premium products. Group disability and life also saw increased sales and strong customer retention.
The company has seen fluctuating net income over the past five years. Net income increased 42% to $2.1 billion in 2014, primarily due to the higher revenue. Cash flow from operations more than doubled, rising 177% to $2 billion.
While it continues to pursue 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 (CIGNA Choice Fund), 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 collaborates with health care providers and regional health plans to lower medical costs and improve access to quality care.
CIGNA is focused on new distribution marketplaces such as public and private exchanges and new buying segments and service expansions. In 2014 the company launched its proprietary private retail exchange in new markets and expanded it in existing markets. Also that year, it opened a new call center in North Fayette, Pennsylvania.
CIGNA is also working to mitigate rising health care costs through means such as entering favorable reimbursement contracts with providers and enhancing operating and administrative efficiencies. 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 has recently withdrawn its small group (2 to 50 employees) offerings in certain states.
Internationally, the company is working to expand its geographic footprint, especially in emerging markets.
In 2014 CIGNA surpassed its goal of having 100 Collaborative Accountable Care Organization arrangements with large physician groups. The company also introduced a suite of initiatives -- Cigna Collaborative Care -- to include small physician groups, specialists, and hospitals.
Mergers and Acquisitions
In 2015 CIGNA bought New Jersey-based QualCare, an insurer focusing on self-funded insurance plans. The combined company is among New Jersey's largest insurance providers; the merger also allows for QualCare to expand its business model nationally.