Home Health Care Report: Cigna may look to divest group benefits insurance business

Report: Cigna may look to divest group benefits insurance business

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Major health insurer Cigna is mulling a sale of its group benefits business in a deal that could be valued at up to $6 billion, according to a report from Reuters.

Selling off the business division, which includes a range of benefit offerings including disability coverage, life insurance and accidental death and dismemberment coverage, would work to organize the company even more strongly on its central healthcare business.

Cigna’s sharpened focus on healthcare is evidenced by a number of recent moves, including, most notably its $54 billion acquisition of pharmacy benefits manager Express Scripts last year.

A major priority for the company as stated by CEO David Cordani in the company’s second quarter earnings call is “treating the whole person” by creating new health coaching and clinical products.

Reuters cited unnamed sources who said that the insurer has enlisted an investment bank to field offers for the division from suitors that could include insurers looking to boost up their own group benefits business.

The company didn’t completely shut down rumors instead saying it “continually review(s) opportunities to ensure we continue to deliver value to our customers and clients.”

According to the company’s recent earnings report, the group benefits division made $1.3 billion in revenue in the second quarter and covers 15.4 million people. The business division brought in $5.06 billion in revenue over 2018.

Cigna isn’t alone in seeking to unload ancillary business lines as it hones its focus on the healthcare space. Aetna – which was the subject of its own 2018 mega-merger with CVS Health – unloaded its U.S. group life and disability business to The Hartford for $1.45 billion in 2017.

Health insurance companies have come under increasing scrutiny by regulators in the wake of the growing M&A activity exemplified by the CVS-Aetna and Cigna-Express Scripts deal.

Politicians have also continued to beat up on health insurers as the drumbeat for a Medicare-For-All system or public option continues to get louder.

Picture: Tetiana Lazunova, Getty Images

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