LOUISVILLE, Ky. (WDRB) — Louisville’s most prominent homegrown company is once again the subject of merger speculation.
Humana Inc. is talking with Connecticut-based rival health insurer Cigna Group about a combination, The Wall Street Journal reported Wednesday, citing unnamed sources.
The potential deal, which the Journal reported could be struck as soon as next month, comes nearly seven years after Humana’s aborted sale to rival Aetna and as longtime Humana CEO Bruce Broussard plans to step down in late 2024.
A combination with Cigna could raise the same antitrust concerns that doomed the Humana-Aetna deal in 2017. But Humana and Cigna have different focuses within the health insurance industry.
Humana specializes in Medicare Advantage, the fastest growing area of health insurance, while Cigna is stronger in commercial insurance and only a minor player in Medicare.
Cigna is exploring selling its small Medicare Advantage business, Reuters reported earlier this month, while Humana announced earlier this year that it’s getting out of commercial insurance altogether.
Humana and Cigna need each other to bulk up and compete with their larger rivals United Healthcare, CVS (which now owns Aetna) and Elevance (formerly Anthem), said Wendell Potter, a former executive at both Humana and Cigna. Potter speculated about the potential deal in his health insurance newsletter on Tuesday.
“They bring different things to the table that would be beneficial to both of them,” Potter said in an interview. “It would enable them to be a much bigger company than they are now and have much greater reach and be able to compete more in the future with the giants of United Healthcare and CVS-Aetna and Elevance.”
Humana, which was founded by Louisvillians David Jones Sr. and Wendell Cherry in 1961, is by far the largest corporation based in Kentucky.
About 10,000 of the company’s 63,000 employees are based in the Louisville area, the company has said.
Even as an independent company, Humana’s connection to Louisville has weakened in recent years, as WDRB documented in 2022. The company has greatly reduced its office footprint in downtown Louisville while establishing an executive office near Washington, D.C.
Underscoring the trend, Humana’s CEO-in-waiting, Jim Rechtin, was given the choice of moving to Louisville or to D.C., though the company has said he will have a “strong presence” in Louisville.
Corporate mergers always raise concerns about job losses via consolidation.
“If this happens, undoubtedly, I would imagine Louisville would lose the headquarters,” Potter said. “That doesn't mean that Cigna would not maintain a significant workforce in Louisville; they probably would.”
