(For other news from the Reuters Health Summit, click on http://www.reuters.com/summit/Health10?pid=500)
* Insurer sees Asia driving most of near-term int'l growth
* Cigna's Cordani sees potential in US individual plans
* Big move into Medicaid not a priority (Adds quotes from CEO Cordani)
By Lewis Krauskopf and Deena Beasley
NEW YORK, Nov 9 (Reuters) - Cigna Corp's
While Cigna primarily offers health insurance through large employers in the United States, CEO David Cordani said the company is seeing a new opportunity emerge for offering plans to older individuals who are no longer working, but are not yet eligible for Medicare.
Indeed, he said, Cigna's strength in the employer marketplace gives the company access to retirees who are not yet eligible for Medicare, the U.S. government health program for the elderly.
"We see meaningful needs for those individuals and a bit of a fractured marketplace," Cordani said at the Reuters Health Summit on Tuesday.
Cordani said he believes that the market for either primary or supplemental coverage for individuals between the ages of 55 and 64 will be attractive for Cigna in the future.
"Today's 55-year-old is going to most probably have a different level of Medicare coverage when they are 65 or 68 years old," he said.
Under Cordani, who took the reins as CEO at the beginning of the year, Philadelphia-based Cigna is investing in growth opportunities abroad, including products sold directly to individuals that supplement government programs.
In its international business for providing supplemental insurance products, Asia will be the main growth area in the near term, complemented by Europe and the Middle East, Cordani said, and the company is eyeing an eventual move into Latin America.
"We continue to believe that the global expansion of our business is an extremely attractive opportunity and will continue to be a significant driver of our growth," Cordani said.
Domestically, although the new U.S. health reform law paves the way for a vast expansion of the Medicaid plans for the poor, Cordani said a significant move into Medicaid was not a top priority for now.
"We would see the opportunity to leverage some individual capabilities for people who may be lapsing in and out of Medicaid-eligible," Cordani said. "But for a pure Medicaid play today? Not the No. 1 priority of the corporation."
BIG DEAL FOR SCALE NOT NEEDED
Cigna's lines of business serving large U.S. employers and international markets, and providing disability and life insurance has made it less vulnerable to the new reforms than other insurers in Wall Street's eyes. [ID:nN09284083]
But its shares have risen only about 4 percent this year, underperforming a 14 percent increase for the Morgan Stanley Health Care Payor index <.HMO>.
Wall Street has singled out Cigna for its high administrative costs compared to rivals, but Cordani said the company's administrative cost structure "has improved dramatically from about two years ago and has the ability to improve somewhat over the next couple of years."
While some analysts say the company could lower its cost structure if it gained scale, Cordani said: "We do not believe we have to do a transformative scale acquisition."
Cordani said the company would seek deals that improve capabilities, such as its Vanbreda deal which augmented its expatriate insurance business, or targeted deals to increase scale.
"Being the biggest across 50 states or 175 cities isn't the strategy," Cordani said. "Being positioned as a leader in the key markets that we want to secure a leadership position is important."
Medical costs have risen this year at lower rates than the insurance industry expected, the CEO said.
Use of preventive, medication compliance and key diagnostic services is on the rise, while use of some high-cost services, like MRIs, has decreased, he said.
Cordani declined to provide a specific outlook for Cigna's earnings for next year, citing uncertainty over new medical cost spending regulations and medical cost patterns, though he struck a note of optimism heading into next year.
"We've been building momentum, and therefore will carry a little tailwind as we step into 2011," he said. (For more on the Reuters Health Summit, see [ID:nN08233600]) (Reporting by Lewis Krauskopf and Deena Beasley; Editing by Lisa Von Ahn and Gunna Dickson)