CIGNA may buy majority share in Montana insurer

By Mike Dennison, of The Standard State Bureau - 11/29/2007

HELENA — One of the nation’s largest health insurance companies may be acquiring a controlling stake of a Missoula-based health insurer, state officials and others said Wednesday.

Details and the proposed buyout’s significance in Montana were unclear Wednesday, but state Insurance Commissioner John Morrison said he understands that CIGNA Corp. of Philadelphia plans to buy a controlling stake of the company that owns Allegiance Health and Life Insurance Co. in Missoula.

The purchase would be part of CIGNA’s $1.5 billion buyout of the health-insurance business of Great-West Life & Annuity Insurance Co. of Denver, which owns an 80 percent share of Allegiance’s parent company. CIGNA announced the proposed deal on Monday.

Dirk Visser, chief executive officer of Benefit Management Corp., the parent of Allegiance, said he’s had no discussions with anyone at CIGNA.

But if CIGNA does end up owning an 80 percent share of the Allegiance companies, it shouldn’t change anything for Allegiance employees and could improve health-insurance products for customers, he said.

“It could actually enhance for us and our customers the benefits we’re getting through Great-West,” Visser said, such as larger networks of health-care providers and better deals on prescription drugs. “At the end of the day, it’s a benefit.

“But there are absolutely no plans and no one has said anything about changing how we operate,” he added. “It’s business as usual for us.” CIGNA, which writes health insurance or manages health benefits for more than 10 million people, is one of the four largest health insurers in the nation.

It announced plans on Monday to buy Great-West Health Care, the health insurance subsidiary of Great-West Life & Annuity Insurance Co.

Great-West Health Care has 3,750 employees and writes insurance that covers 2.2 million people.

CIGNA officials said the company’s purchase of Great-West will strengthen CIGNA’s position in the West and in the health-insurance market selling to small and midsized employers.

“While it’s premature to say what this proposed acquisition will mean in any one state, it’s important to note that a primary reason for this transaction is Great-West Health Care’s strong presence in the northwestern United States,” said company spokesman Joseph Mondy.

There was some confusion this week as to whether the CIGNA deal includes a purchase of Great-West’s share of Allegiance. But Morrison said Wednesday he was told by CIGNA officials that it did.

If CIGNA is buying a controlling share of Allegiance, Morrison’s office would have to approve the deal.

Morrison said his office would review the financial strength of any buyer of Allegiance’s health insurance business, to make sure the company will remain solvent and that policyholders would be protected.

“This would be a significant deal in the health-insurance market in Montana,” Morrison said. “More competition in the health-insurance market has the potential to offer more choices and potentially lower prices.” Allegiance is one of only three Montana-based companies selling health insurance. The others are Montana Blue Cross-Blue Shield, which controls about 50 percent of the market in Montana, and New West Health Services, both headquartered in Helena.

Allegiance, headquartered in Missoula, employs about 200 people.