Cigna Agrees to Buy Healthspring Inc. for $3.8B, Expands Medicare Business

Cigna Corp., the fifth-largest U.S. insurer, agreed to buy Healthspring Inc., a health-maintenance organization, for $3.8 billion as a way to increase the number of Medicare customers it serves, Bloomberg reports.

With the purchase of Healthspring, Cigna will add an additional 1.17 million customers served by Medicare.

“Our focus will be on ways to expand in the individual market in the U.S.,” Cigna Chief Executive Officer David Cordani told Bloomberg. As for Healthspring, “We're excited about the growth potential. We have wanted to do this for a while and the timing seems right.”

The Healthspring acquisition fits with the way the market is growing because of an aging population and the 2010 healthcare overhaul, Cordani told Bloomberg on a conference call. Medicare managed-care plans are among the fastest-growing products for health insurers as the baby boomer generation ages.

The Healthspring purchase is the largest managed-care deal announced this year, according to Bloomberg data. It is the second for Cigna in 2011. The company agreed last month to buy Firstassist Insurance Services, a U.K. travel and protection insurer.

According to Bloomberg, Cordani said in the telephone interview that Cigna will also seek to expand in the individual-policyholders market as the nation prepares to open state health insurance exchanges for consumers as mandated by the 2010 healthcare overhaul.