Cigna Corp. said Friday it completed its acquisition of Austin, Texas,-based Great American Supplemental Benefits for $305 million in cash.
Bloomfield-based Cigna bought the Texas health insurer from Cincinnati-based American Financial Group, Inc.
The sale was initially announced in May. Great American Supplemental Benefits had $400 million in assets, $325 million in revenues and $34 million in pre-tax operating earnings for American Financial Group last year. The Texas insurer handles about 200,000 policies for customers, some of whom have more than one policy.
This acquisition grows Cigna's reach in the individual market and in the Medicare Supplement market, both of which are very attractive to health insurers. Baby boomers will continue to inflate Medicare rolls in the next two decades, and Obamacare is expected to drive millions of people into the individual market. The deal also allows Cigna to extend its retail efforts of selling directly to customers and broadens its distribution network of agents and brokers.
Cigna's purchase also is part of an ongoing trend in the industry as big health insurers buy up smaller competitors, giving the larger companies stronger bargaining power when negotiating rates for medical services with hospitals and doctors.