Cigna now allegedly offloading Medicare Advantage business

[Maphistos_Sidekick]

WSJ News Exclusive | Cigna Nears Deal to Offload Medicare Business

Cigna is in advanced talks to sell its Medicare business in an about-face for the health-insurance giant, which had been expanding its footprint in the fast-growing sector.

Cigna, which has been running an auction for the business, known as Medicare Advantage, is now in exclusive talks to sell it to Health Care Service Corp. for between $3 billion and $4 billion, according to people familiar with the matter.

Should there be a deal, it would mark a major expansion for HCSC, a big nonprofit health insurer that is the parent of Blue Cross Blue Shield plans in five states including Texas and Illinois. HCSC has long been a powerful player in its home states, but the deal would give it a significant Medicare business and far broader reach. Cigna is offering Medicare plans in 29 states for 2024.

Cigna is proceeding with the potential sale even though its talks to acquire Medicare-focused insurer Humana broke off after investors reacted coolly to the possible megadeal. Cigna said that it plans an additional $10 billion of stock buybacks. It is also expected to focus on smaller, so-called bolt-on acquisitions.

[BigBlackBen]

An absolute 180 pivot from trying to become a massive MA player to completely divesting their MA book

[joejam]

P&C actuary reporting for duty. Is MA or regular insurance generally more profitable?

[dr_t_non-fan]

@joejam

Is MA or regular insurance generally more profitable?

Generally, it depends.
The real issue is whether HCSC has enough actuaries and others to work the bids for that many states. Now, if they are already in all the states (and thus have the employees) and this is just more policyholders, then no problem. Surprised that Anthem or UHC aren’t asking to bid on it. Could get a nice war going, though it’s possible they know it’s not all that. From what I’ve experienced, it’s a lot of grunt work (nothing really actuarial about it) for a lot of grunts. Lots of consultants paid by the Feds to churn as much business as they can by asking incessant questions.
Maybe HCSC will take the actuaries and other grunts along with the business, though economies of scale should result in a lot of layoffs.

[Maphistos_Sidekick]

@BigBlackBen

An absolute 180 pivot from trying to become a massive MA player to completely divesting their MA book

I was wondering if this is a situation where you need a certain scale to achieve expense efficiencies. If you can’t get that scale, then it’s difficult to get the ROE you need to justify being in that business…?