Wednesday, November 28, 2007

US health insurer goes West Cigna, the #4 US health insurance company by enrollees, consolidated its position with the purchase of Great-West Healthcare. The deal is worth $1.5 billion. Cigna's strongest area is in the East Coast, where it is located. Great=West, headquartered in Colorado, has its customers in the Rocky Mountain states and California. The buy will increase Cigna's 10 million medical plan subscribers by another 2 million. Cigna specializes in selling healthcare insurance to large businesses, whereas Great-West has been involved in selling to small- mid-size firms. Great-West Healthcare is a division of Canadian firm Great-West Life & Annuity Company, which wll continue on in its life insurance business. The conclusion: Cigna made a vertical move both geographically and in terms of target customer, but stayed well within its main business model. Great-West Life's move is part of a trend which indicates that life insurance is a whole different category with less in common with health insurance than once was thought. This is part of a big, long-term shake-up in the industry. Also, Great-West Healthcare's market muscle was inadequate to keep in line with its bigger competitors. 5:10:56 PM

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