One of the world's largest providers of insurance, financial services, and health care, CIGNA was founded through the 1982 merger of Connecticut General and the Insurance Company of North America (INA). With corporate roots in 18th-century Pennsylvania, INA was an industry pioneer. The company was the first to insure an automobile for fire and theft and insured the first expedition to scale Mt. Everest. In the meantime, Connecticut General developed as one of the first companies to set out into the group life insurance business.

CIGNA grows up

With its 1984 acquisition of the American Foreign Insurance Association, CIGNA became one of the two largest international insurance providers in the U.S. The company's products and services cover numerous insurance and investment areas, including managed care insurance, life insurance, 401(k) plans, and investment management for businesses. The past few years have been kind to CIGNA as well; in 1998, revenues topped $21.4 billion, with profits reaching nearly $1.3 billion. Profits in 1999 totaled $2.6 million.

Especially lucrative is CIGNA's health care arm, which was bolstered through the 1997 acquisition of Healthsource Inc. The health care business, which encompasses the company's extensive HMO and indemnity operations, pulled in $12.6 billion last year, while operating income was up to $617 million from $511 million in 1997. HMO membership climbed 11 percent to about 6.5 million. Members can take advantage of the 3100 CIGNA-contracted hospitals and 220,000 participating physicians. Meanwhile, about 16 million other people have CIGNA coverage for dental, pharmacy, or other health care purposes.

Active dealings

Further lining CIGNA's coffers was the $3.45 billion sale of its property-casualty business to Bermuda-based ACE Limited. By shedding the division, which accounted for about a quarter of sales and employed over 6000 people, CIGNA is reorienting itself toward employee benefits, which had been the original focus of pre-merger Connecticut General.

CIGNA has been involved in a number of other recent dealings as well. In June 1998 the company entered into a joint venture with Tokyo's Yasuda Fire & Marine Insurance Co., Ltd. to sell pension and investment products in Japanese markets. CIGNA was very busy on the international front in 1998, naming Gary T. Schmalzriedt Chairman and CEO of CIGNA Europe, as well as acquiring an 80 percent stake in Chilean health care provider Isapre Unimed, S.A.

In 2000 CIGNA signed a deal with Walgreens, adding the chain's 2,700 stores to the 41,000 pharmacies that it already dealt with. This nationwide network helps CIGNA control prescription drug costs. Also in the spring of 2000, CIGNA settled a lawsuit by agreeing to pay the U.S. government almost $9 million for over-billing on Medicare documents from 1990 to 1997.

Abandoning Medicare

CIGNA announced in the summer of 2000 that it would no longer participate in the Medicare market, effective January 1, 2001. This move forces over 100,000 senior citizens to find new health insurance, which will be increasingly difficult as other managed care companies indicate they are considering the same thing. Those unable to find coverage will be forced to return to fee-for-service Medicare coverage. A CIGNA spokesman did conceed that the company may re-engage in the Medicare business if the federal government increases reimbursements or pays for prescription drugs.

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