CIGNA Completes Deal For Great-West
02 04 08 - 13:59
Strengthens Position In Pacific Northwest
By DIANE LEVICK | Courant Staff Writer
April 2, 2008
CIGNA Corp. said Tuesday it has completed the purchase of Great-West Healthcare for $1.5 billion in cash and an additional $400 million of capital that CIGNA subsidiaries will retain to support the acquired business.The deal, first reported by The Courant in November, involves 1.9 million people served by Great-West Healthcare, including 1.4 million medical members in employer-based health plans. Great-West is based in the Denver area and is a division of Great-West Life & Annuity Insurance Co.
CIGNA spokesman Joe Mondy said no layoffs are planned at CIGNA or at the operations acquired from Great-West Healthcare as a result of the deal. CIGNA has offered jobs to more than 3,500 Great-West employees nationally, and they have until the end of this week to respond. Only 11 have declined the offers so far, Mondy said.
The acquisition gives CIGNA a stronger foothold in the Pacific Northwest and provides opportunities to cross-sell group disability and dental insurance and medical and disease management programs to customers of Great-West, Mondy said.
CIGNA expects that the acquisition will start adding to earnings this year, but it has not said how much. Matt Perry, a senior analyst at Wachovia Capital Markets, estimated Tuesday it will add 2 cents a share to this year's earnings and 30 cents a share in 2009.
Great-West is the health insurer's largest acquisition based on enrollment since the 1997 purchase of Healthsource in New Hampshire.
CIGNA's stock price rose nearly 9 percent on Tuesday to close up $3.61, at $44.18 a share.
CIGNA is based in Philadelphia and bases its health insurance business in Bloomfield. The company had about 10.2 million health plan members at the end of December.
Contact Diane Levick at dlevick@courant.com.