Cigna will pay Great-West's parent company, Great-West Lifeco Inc. of Canada, $1.5 billion in cash. In addition, the Philadelphia health insurer said it will invest $400 million over 12 months in what it called additional capital to reinsure and support the newly acquired business.
The purchase will give Cigna a larger market share in Colorado, California and parts of the Pacific Northwest, particularly in health plans for small and midsize employers. That market has been one of the most competitive in health insurance as rising coverage costs force employers to cut or drop benefits and stifle market growth.
The acquisition of Great-West Healthcare will add about 1.5 million medical-plan members to the 10.2 million members for which Cigna insures or administrates health benefits.
Great-West Healthcare, of Greenwood Village, Colo., has 3,750 employees and provides benefits to about 2.2 million people nationally.
Great-West Lifeco, a Winnipeg, Manitoba, financial-services and life-insurance company, said it will focus on expanding its financial-services business.