Tag Archives: cigna

CIGNA to acquire ExpressScripts

After CVS agreed to acquire insurer Aetna, CIGNA has agreed to purchase express scripts for $67 billion.  Express Scripts is the largest pharmacy benefit manager (PBM) in the country.  This continues the remake of the nations healthcare system through merger and acquisition:


“Aetna and CVS have said they hope to create “front doors” to healthcare through 9,800 stores run by CVS. That deal could turn many of the chain’s stores into one-stop-shop locations for an array of healthcare needs like blood work and eye or hearing care, in addition to their traditional role of filling prescriptions.

UnitedHealth Group Inc., which runs the nation’s largest insurer, is spending almost $5 billion to buy nearly 300 primary and specialty care clinics and some urgent care and surgery centres. That push will help the company steer patients away from expensive hospital care.

Another insurer, Humana Inc., is making a separate deal to better manage the care of its Medicare Advantage patients.”

CIGNA NY Fined $2,000,000 by Insurance Department


DFS Investigation Discovered That Cigna Illegally Sold Stop-Loss and Fully Insured Health Insurance Policies Outside of New York to New York-Based Small Groups

Cigna Cherry-Picked Risks, Undermining the Integrity of New York’s Health Insurance Market

Financial Services Superintendent Maria T. Vullo today announced that the Department of Financial Services (DFS) has fined Cigna Health and Life Insurance Company $2 million for violations of New York State Insurance Law involving the illegal sale of stop-loss insurance and unapproved health insurance policies that would otherwise have been part of New York’s small-group market.  Stop-loss insurance may be sold only to large group employers that self-fund underlying medical expenses in order to mitigate liability for losses that result from an unexpected amount of claims.  In a consent order entered into with Cigna and announced today, DFS found that Cigna improperly sold stop-loss and fully insured health insurance policies outside of New York to New York-based small groups with employees in New York State, and where, in many cases, the companies solicited business and conducted other activity in the state.

“By deliberately choosing to write New York risks outside of New York, Cigna’s actions harmed New York’s community-rating program for small group employers,” said Superintendent Vullo.  “Cigna cherry-picked risks, which may have improperly induced forum shopping in the New York small-group market.  DFS will continue to protect New York consumers and take appropriate enforcement action against any company that engages in unfair trade practices to undermine New York’s health insurance market.”

After receiving complaints about Cigna’s practices, DFS requested that Cigna immediately cease selling the illegal stop-loss policies pending a DFS inquiry.  The company initially agreed but later resumed selling the policies in question.  DFS also became aware that Cigna was issuing fully insured health insurance coverage outside of New York to New York-based small groups based on the fact that those small groups were incorporated outside of New York but where, in many cases, the companies’ solicitation and other activity occurred in New York.

Cigna, based in Connecticut, is licensed as a life insurance company in New York, and is authorized to write life, accident, and health insurance in New York, including stop-loss insurance.  Cigna does not have fully insured health insurance coverage products approved to sell to small groups in New York.

A targeted examination by DFS found that Cigna sold 81 group health insurance policies in violation of New York Insurance Law, including 38 stop-loss insurance policies to New York small groups seeking to self-insure and 43 fully insured health insurance policies to small groups as if they were selling to non-New York small groups.

A copy of the consent order can be found here.

Cigna Anthem Merger may not get done


Bloomberg) — Cigna Corp.’s acquisition by health-insurance rival Anthem (NYSE:ANTM) may not be approved this year, Cigna (NYSE:CI) said Friday in a regulatory filing.

Shares of both companies declined. An analyst said the delay could be a sign of trouble for the deal, which is one of two pending health insurance combinations being scrutinized by regulators. Regulators have expressed concern about further concentration of the health care industry.

“While the company continues to work toward achieving regulatory approval as quickly as possible and to target a closing date in the second half of 2016, the closing will ultimately be subject to the approval and timing of the regulators,” Cigna said in a quarterly report filed with the U.S. Securities and Exchange Commission (SEC). “In light of the complexity of the regulatory process and the dynamic environment, it is possible that such approvals may not be obtained in 2016.”

Joseph Swedish, Anthem’s chief executive officer, said last week that he expected the acquisition of Cigna to be completed in the second half of this year. On Friday, Jill Becher, an Anthem spokeswoman, said the insurer continued to expect the transaction to be completed on that timeline.

Anthem agreed in July to buy Cigna in a cash-and-stock deal that valued Cigna at about $48 billion. The transaction, along with the pending acquisition of Humana (NYSE:HUM) by Aetna (NYSE:AET), would reduce the number of big U.S. health insurers to three, from five.

The Anthem-Cigna merger requires approval from the U.S. Justice Department’s antitrust division as well as state insurance regulators. In March, Bill Baer, now the No. 3 official at the Justice Department, called the Cigna deal and Aetna’s deal for Humana “transformational” and said they require close scrutiny from the government.

Matt Asensio, a Cigna spokesman, declined to specify why the insurer cautioned that the deal may not happen this year.

“This disclosure reflects our current understanding, based on the breadth and depth of the review and where we believe we are in the process now,” Asensio said. “We feel that it’s a dynamic environment, and there’s a lot of complexity in the regulatory process, so it’s possible that the approvals may not be obtained in 2016.”

Cigna said in the filing that Anthem may owe it a breakup fee of $1.85 billion if the transaction isn’t completed by Jan. 31, 2017. That deadline can be pushed back to April 30, Cigna said.

Cigna fell 1.9 percent to $132.40 at 10:30 a.m. in New York, while Anthem declined less than 1 percent to $136.77.

Peter Costa, an analyst at Wells Fargo & Co., said Cigna’s disclosure indicates the deal could be delayed or not approved at all. “The 10Q deal timing disclosure is a significant item that likely widens the spread,” he wrote in a research note to clients.

See also:

Aetna’s Humana deal pressures Cigna to agree on Anthem offer

AIG Confirms It Will Get Breakup Fee

CIGNA banned from Medicare Sales

Cigna was temporarily banned from marketing its Medicare products to new customers, after the U.S. found deficiencies in how the health insurer ran its plans, citing widespread violations that the government said threatened patients’ health.  This means that existing customers can keep their policies but no new customers can be brought on board.

I appears this relates more to the Medicare Advantage plans than Prescription Plans.

It will remain to be seen if this impacts the pending merger with Anthem Health.

Big Plan mergers not done deal.

The chief executive officers of Aetna Inc. and Anthem Inc. are confident that their planned acquisitions of rivals Humana and Cigna, respectively, will go forward. Shareholders have approved the $54.2 billion and $47.5 billion transactions, and both are expected to close in the second half of the year.

Yet a closer look at how the Department of Justice is treating such megamergers suggests that the sailing may not be quite so smooth.

A recent report from law firm Gibson Dunn & Crutcher LLP reveals that antitrust enforcement is growing, with 2015 a “banner year for [Department of Justice] merger enforcement efforts.” In fact, antitrust enforcement agencies brought an average of 34 merger enforcement ations per year, increasing to 41 between 2010 and 2012.

Going forward, Gibson Dunn believes federal agencies will “continue to challenge transactions at a relatively high rate.”

While the Justice Department is still reviewing the Aetna-Humana and Anthem-Cigna mergers, it has set a precedent of objecting to high-profile merger proposals in other sectors. General Electric and AB Electrolux called off their deal in December, as did Tri-Union Seafoods and Bumble Bee Foods, after the Department objected to them on the basis of reduced competition.

For the full article click here.

Reeve Conover is a Registered Representative. Securities offered through Cambridge Investment Research, Inc., a Broker/dealer member FINRA/SPIC. Cambridge and Conover Consulting are not affiliated. Licensed in SC, NC, NY, CT, NJ, and CA.
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