U.S health insurance company Cigna Corp is considering a sale of its group benefits insurance business, which could be valued at around $6 billion, according to sources familiar to the matter.
The unit for sale provides disability insurance plus life and accidental death and dismemberment coverage to groups of company employees.
Cigna’s move to sell it underscores its decision to concentrate on healthcare following the $54 billion acquisition of pharmacy benefits manager Express Scripts Holding Company last year.
In addition, Cigna would be able to compete with rival drugstore giant CVS Health Corp, which also acquired Aetna in 2018. CVS has already rolled out hundreds of HealthHubs staffed by nursing practitioners and other clinicians.
Sources said on Tuesday that the health insurer hired an investment bank to auction the group benefits business. The unit could attract interest from other big health insurance companies that already have a similar product and are looking to scale in that competitive marketplace, the sources added.
However, a Cigna spokesman insisted the company does not comment on rumors and speculation.
“Given the dynamic marketplace, we continually review opportunities to ensure we continue to deliver value to our customers and clients,” he said.
The sources asked to remain anonymous because the matter is confidential.
Cigna’s group benefits and disability division reported $1.31 billion of adjusted revenue and covered 15.4 million individuals as of June 30, according to the company’s second-quarter financial statement.
Other health insurance firms have made similar divestitures. In 2017, Aetna Inc sold its group life and disability division for $1.45 billion to Hartford Financial Services Group.
As health insurance companies face regulatory uncertainty amid political endeavors to lower the U.S healthcare costs ahead of the 2020 presidential election, the Bloomfield, Connecticut-based health insurer will be hoping to count on Express Scrips.
Proceeds from any deal of its group benefits insurance unit could help Cigna pay some of its long-term debt, which was around $37 billion as of the end of June.