Cigna CEO Sees Major Profit Opportunity Abroad

NEW YORK (Reuters) - The new head of Cigna Corp is looking abroad to fuel the U.S. health insurer's profits.

David Cordani, who started as chief executive officer of the health insurer officially on January 4, believes a bigger international presence is critical to increasing Cigna's bottom line.

"The new business strategy's focus is squarely on growing the corporation and growing the corporation on a global footprint," Cordani, 43, said in an interview.

An 18-year Cigna veteran, who most recently served as chief operating officer, Cordani wants to expand in countries where Cigna already operates, such as China, while planting flags in new countries like India and Turkey.

While other health insurers, such as Aetna and UnitedHealth Group, have made inroads globally, Cigna's international business has drawn the most attention on Wall Street.

Philadelphia-based Cigna's international business represents about 15 percent to 18 percent of overall company profits, and that proportion could rise significantly in the next five years, Cordani said.

"You could see a scenario where five years out...you have a collection of businesses that is making up about 30 percent of the organization," he said.

About 60 percent of Cigna's international operations involve products sold to individuals through telemarketing, Internet and other methods. These products supplement government programs to provide insurance for health, life, accident, disability, dental and other areas.

Another 35 percent of the international unit is providing benefits to employees of multinational companies working abroad, known as expatriate products. A smaller portion of the international business is providing primary medical insurance in countries like Spain and Britain.

Cordani said Cigna has a "high intensity" of focus in Southeast Asia.

"Within those countries, we are pouring additional resources in for both product expansion as well as distribution channel expansion," he said.

In China, where Cordani says each province could be seen as its own country because of its size, scale and separate regulations, Cigna is expanding. It already has 2,000 employees in the country and more than 600,000 policies in force.

"We will expand quite aggressively in China," Cordani said.

Demographics outside the United States spell opportunity for Cigna.

"You have a growing middle class in many of the countries that are very attractive to us," Cordani said. "As those individuals grow in the middle class, their need to protect or enhance their health, well-being or sense of security grows rather rapidly."

In the United States, layoffs from the weak economy has pressured the membership of health insurers, including Cigna. Cordani said Cigna's membership can be relatively stable this year -- plus or minus 1 percent.

"What has been played back to us is that would be an industry-leading result, and what it surely represents is taking share," Cordani said. "We do expect to take share in 2010."

The overarching issue for health insurers remains the outcome of U.S. health reform. The Senate and House of Representatives will soon begin the last stages of the legislative process as they try to reconcile their respective bills.

Cordani said reform efforts have been disproportionately focused on increasing access to coverage, with not enough on improving quality and containing costs.

"If you have access expansion in a system that has uneven or unstable quality and costs, that doesn't speak toward a sustainable solution," Cordani said. "Most of our energy right now is being expended on the quality and cost side of the equation."

(Reporting by Lewis Krauskopf; editing by Leslie Gevirtz)