Bloomfield-based health insurance giant The Cigna Group announced early Wednesday that it has agreed to sell its Medicare Advantage business to Health Care Service Corp. in a deal valued at $3.7 billion.
The sale also includes its Cigna Supplemental Benefits, Medicare Part D and CareAllies businesses. The transaction is expected to close in the first quarter of 2025.
“The agreement will enable The Cigna Group to drive meaningful value for all our stakeholders, providing an enhanced ability to accelerate investment and growth in our services platform, while further deepening our commitment to our existing health benefits platform,” said David M. Cordani, Cigna’s chairman and CEO.
According to the announcement, Cigna is allocating resources toward growth in its Evernorth Health Services and Cigna Healthcare portfolios.
“While we continue to believe the overall Medicare space is an attractive segment of the healthcare market, our Medicare businesses require sustained investment, focus and dedicated resources disproportionate to their size within The Cigna Group’s portfolio,” Cordani added.
Health Care Service Corp. is a member-owned health insurance company based in Chicago. It is the third-largest health insurance company in the United States, according to Forbes.
Cigna has around 4,520 employees in Connecticut, according to Hartford Business Journal’s most recent Book of Lists, which used data from the town of Bloomfield’s annual report.
According to Cigna’s latest annual report, the company reported approximately 71,300 employees at the end of 2022, with 94% based in the United States.
A company spokesperson said the businesses included in the sale are based primarily outside of Connecticut. Cigna expects that “substantially all” employees of those businesses, as well as the employees who primarily support them, will transfer to Health Care Service Corp. when the deal closes.
Cigna began looking to shed its Medicare business late last year, a reversal of its previous expansion in the sector, Reuters reported in November.
Medicare Advantage is an alternative to government-sponsored Medicare, which is offered by private companies, mostly to people 65 and older. Medicare Advantage plans are approved and funded by the federal government.
Cigna had roughly 599,000 Medicare Advantage members at the end of September, according to the Wall Street Journal.
Forbes lists Cigna as the 27th largest health insurance company in the United States, with a market share of about 0.8%. The company’s revenue totaled $7.9 billion in 2022.
The move follows Cigna’s failed effort to acquire rival Humana in December, which would have created a massive company with a combined market value worth more than $140 billion.