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Harping on its strategy of  “Go Global”,  earlier during the week, CIGNA Corp. (CI) announced  its entry into Turkey in a bid to broaden its international footprint.

CIGNA will operate as a fully-licensed insurer in the region and conduct business via Hayat Sigorta S.A., which will be based in Istanbul. The company will sell health insurance policies and health care services to the individuals in Turkey.

The entry into new markets is in sync with the company’s strategy to expand its international business, which is its key to future growth.

CIGNA’s International segment offers supplemental health, life and accident insurance products as well as international health care products and services. These products and services are provided by subsidiaries of CIGNA Corporation, including foreign operating entities. CIGNA International also provides employers, affinity groups and individuals with quality local and global health care as well as related financial protection programs.

CIGNA holds licenses in over 27 countries and jurisdictions, including South Korea, Taiwan, the European Union, Hong Kong, Indonesia, China, New Zealand and Thailand. In China, CIGNA International owns a 50% interest in a joint venture through which its products and services are offered. CIGNA International offers products and services to both local citizens and globally mobile individuals. CIGNA International serves expatriates virtually everywhere in the world.

CIGNA’s growth strategy involves expanding its foreign operations in growing markets (South Korea, China, Spain, Indonesia and India) and entering into targeted new markets outside of the U.S. As a result, CIGNA’s business is increasingly exposed to risks inherent in foreign operations. CIGNA generated approximately 11% of its 2010 revenues from the International Segment. These risks, which can vary substantially by market, comprise political, legal, operational, regulatory, economic and other hazards, including government intervention and censorship that the company does not face in its U.S. operations.

However, we believe that CIGNA’s exposure to the international market will allow it to bolster earnings and expand margins. The company’s international business offers faster growth (high-double digits) and higher margins (high-single digits to low-double digits) than its commercial book. It also has high barriers to entry. Yet, we acknowledge the company’s efforts to expand its international footprint with acquisitions. The Vanbreda acquisition in August 2010, an expatriate business, is expected to offer double-digit revenue growth and earnings contributions after integration and incur transaction costs of $10–$5 million after tax in 2011 and $50 million in 2012.

CIGNA competes with UnitedHealth Group Inc.(UNH), Aetna Inc. (AET), WellPoint Inc. (WLP), and Humana Inc. (HUM).

 
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