Florida Approves Anthem Bid to Acquire Cigna’s Florida-Based Affiliates

The Florida Office of Insurance Regulation (OIR) has issued a Consent Order approving, with additional requirements, Anthem, Inc.’s application to acquire 100 percent of the issued and outstanding voting securities of HealthSpring of Florida (d/b/a Leon Medical Centers Health Plans), Cigna Dental Health of Florida, Inc., and Cigna Healthcare of Florida, Inc. The proposed acquisition of Cigna’s Florida companies is part of Anthem’s proposal to acquire the Cigna Corporation.

According to a statement from OIR, a public hearing was held on Dec. 8, 2015, where OIR received testimony from Anthem and public comments regarding the acquisition. Additionally, OIR said it conducted a survey of the various market segments impacted by the proposed acquisition.

An OIR economist reviewed this market data and analyzed the materials submitted in support of the application, specifically focusing on whether the proposed acquisition would reduce competition. The economic analysis found that both companies, either individually or in combination, are not a dominant factor in the Florida market and would not increase market concentration on a statewide basis, OIR said.

It also revealed that Anthem and Cigna compete only in the Medicare Advantage product market and “the combined entity would have a nonmaterial impact on competition.”

The only area of potential competitive concern with the acquisition, according to OIR, was whether restrictions included in Anthem’s license agreement with the Blue Cross Blue Shield Association (BCBSA), would reduce competition in Florida. Under its license, Anthem is required to have at least two-thirds of its national business branded as “Blue.” If the “Blue” business drops below this required limit, the concern is that this could limit growth of the Cigna companies.

While at the time of the acquisition, Anthem would not meet this requirement, the market analysis revealed that as a result of the time allowed by BCBSA for Anthem to come back into compliance and the number of options open to Anthem, this issue would not have a substantial impact on the companies’ ability to grow in Florida.

Overall, the analysis found that “there does not appear to be a meaningful adverse competitive effect as a result of the proposed acquisition, even under the most conservative estimation.”

Key aspects of the Consent Order include:

• An agreement by Anthem to continually monitor and enhance its information security program in order to mitigate data security breaches and notify OIR within five business days should a breach occur.
• A requirement that Cigna’s Florida-based HMOs stay in compliance with capital and surplus requirements and Risk-Based Capital standards.

The proposed acquisition of Cigna is still subject to review by the U.S. Department of Justice and the Florida Attorney General, under standards that may be materially different than those utilized by the OIR.Anthem and Cigna shareholders approved the proposed acquisition in December 2015.