In accordance with its long-term strategy of accelerating
international operations, health insurer
) has announced a 50:50 joint venture with Saudi Arabian
Insurance Company B.S.C (C) (SAICO).
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Under the new agreement, both the companies will expand their
health, wellness and insurance products. The regional and
multi-national employers and organizations across the Middle East
will be the target customers of this alliance.
According to CIGNA, SAICO would be the best fit for its health
insurance business since the latter boasts a strong brand
reputation and a deep reach in the Middle East market. Moreover,
both the companies have been working together for over a decade.
CIGNA had been eyeing the Middle East market for quite some time,
since it is a huge market and offers long-term growth.
Owing to the significant regulatory pressures back home in the
face of the Health care reform, health insurers are moving toward
new markets. To unburden itself from such pressures, CIGNA has
been diversifying its operations in China, India, Turkey and
other Middle Eastern countries.
CIGNA's international business is expected to fuel its future
growth. Moreover, we believe that the company's distinctive
presence in the emerging markets will bolster its earnings and
expand margins. Further, its international business offers faster
growth (high-double digits) and higher margins (high-single
digits to low-double digits) than its commercial book. Given the
aggressiveness, with which CIGNA is focusing on its strategy "Go
Global", we expect that the contribution of its
international business to total earnings would rise approximately
by one-third from one-fifth currently.
UnitedHealth Group Inc.
) are also growing their international businesses. Going forward,
we expect to see more international deals as carriers are eying
growing economies of Asia and the Middle East.