OLDWICK, N.J.--(BUSINESS WIRE)--December 2, 2007--Cigna Corporation’ s planned $1.5 billion acquisition of Great-West Heathcare is the latest example of the fierce competitive pressures facing regional health insurers when they attempt to go head to head with the biggest health insurers in the United States, according to a story in BestWeek U.S./Canada.
But in an ever-consolidating industry, some companies may survive and perhaps thrive by steering clear of the markets the giants are focused on and by developing a niche by serving certain customers.Cigna said it would buy the Denver-based subsidiary of Great-West Life & Annuity Insurance Company, the U.S. unit of Canada’ s Great-West Lifeco Inc., for about $1.5 billion cash in a deal Cigna says would expand its presence in the western United States.Great-West is a good example of a regional health-care company that “was trying to compete against the big managed care companies nationally and wasn’ t able to gain the critical mass,” said Scott Wood, co-chief operating officer of Independence Holding Company [NYSE: IHC], a small, regional health insurer that’ s looking to grow its fully insured health business by targeting small businesses, which Independence defines as companies with two to 50 employees.Great West was “a BUCA wannabe,” he said. BUCA refers to Blue Cross Blue Shield companies owned by WellPoint, as well as UnitedHealth Group, Cigna and Aetna, the four biggest health insurers in the United States. It also refers to independent Blues plans that generally dominate in the states where they do business.
For its part, Great-West Lifeco, one of Canada’ s biggest life insurers, said the sale would allow its focus in the United States to be on its financial services businesses.
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