Seniors SegmentStrategies, Trends, Competitors, and Other External

Factors

Thursday, October 3, 2013

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Senior Segment - Agenda

Overview

Core Strategies

Value Proposition

Recent Driver Performance

Us vs. Them

SWOT Analysis

Stakeholder View

Vision

Direct Customer Perspective

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Senior Segment - Overview

Primary Products and Customers

Products:• Medicare and Medicare Advantage• STAR+PLUS is a Texas Medicaid

• Service Coordination • Long–Term Services and Support • Transportation

Customer• 65 older• Baby boomers• Disabled under 65

Geographic Locations• Florida• Texas• Tennessee

Distribution Channels

Website• Instant access to relevant

information and user friendly nature of the website are the key factors driving effectiveness of this marketing channel

Email• Low cost and instant delivery

Social Channels• Insurers can position themselves

differently through the use of customized applications and build a strong relationship with the association members

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Senior Segment – Core StrategiesIntegrate and

OptimizeShort Term

Realize short term synergies

Establish Foundation for

strategic growth

Measure: Realize enterprise

synergies of $270M+ through

2016

Grow Products and Markets

Long Term

Diversify and balance portfolio

Go deep & expand in targeted

geographies

Improve customer retention

Measure: Achieve 15-16% revenue

CAGR over next 5 years & Enter 10+

new markets

Develop Next Generation Insights

& ResearchLong Term

Deploy next generation retail

& service capabilities

Tailor Customer Engagement

Enhanced patient-provider

engagement

Measure: Improve retention, Increase

earnings per customer, Achieve

5-star ratings

Advance the Value Based Delivery

Model Long Term

Enhance clinical decision-making

Adapt delivery model and

commercialize Medicare service

operations

Measure: Deploy alternate value-based model in new markets,

Expanded MSO capabilities &

earnings

Enablers – People & Technology

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Senior Segment – Value Proposition

HealthSpring is the leading health service company that develops value-based delivery systems to help seniors live better through personalized solutions that are simple, affordable and easy to use.

How to Create Value

Enable deep, personalized patient-physician relationships through innovative clinical and consumer engagement, care coordination and clinical analyticsCreate value for customers with products and services that fit their needs and improve well-beingAlign customer and provider incentives to drive improved outcomes and promote healthier living

Focus

Customer Engagement

Physician Engagement Incentives Information

TechnologyCare

Extenders

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Senior Segment – Recent Driver Performance

Cash Profit

People

Assets

Growth

-2012 Acquisition of Health Spring-Additional growth may be achieved through a mix of organic seeding and inorganic accelerants-Achieve 15-16% revenue CAGR (compound annual growth rate) over next 5 years-Enter 10+ new markets

-Dramatic increase in customers and caregivers

HealthSpring, combined with legacy Senior Segment, is forecasted to grow to 2.5 M members and $1.2B in earnings across MA-PD, PDP, and Medicaid by 2017

-Unlike competitors using cash to execute growth strategy

-Medicare plans, HealthSpring operations, Health Spring Clinics

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Senior Segment – Us vs. Them

Cigna

HS integration

Opportunity for growth within existing markets.

Large built-in network of users

Humana

53.7% of total revenues

25 years in senior segment

Available in all 50 states

High trust in users across portfolio

Higher exposure to potential Medicare changes.

Aetna

12% of total revenues

14% growth year over year

1.1M targeted for this year

Benefit ratio over 80%

Much smaller built-in network

Mergers & Acquisitions

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Senior Segment – SWOT Analysis

Strengths

• Mature market segment almost 50 years old

• HealthSpring integrated / vertical delivery model improves Cigna’s value proposition (consultative selling & customer focus)

Weaknesses

• Cigna relatively new to Seniors segment pre-HealthSpring

• Volatility in eligibility MA vs. PDP

Opportunities

• More Baby Boomers entering eligibility 60% of generation 65+ by 2020

• Rx Medicare Part D & Standalone

• Lower customer acquisition costs / expenses enhanced retail capabilities

Threats

• Catamaran PBM / BPO could disrupt current Catamaran / HealthSpring relationship, could negatively impact Medicare & Medicare Advantage / Plus claims

• Competitors actively pursuing similar vertical integration through acquisitions / partnerships expanding portfolios to offer more products & diverse plan offerings

• Medicare Program Regulations MLR floor(s) / closing the donut hole, PPACA

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Senior Segment – Stakeholder View - Vision

• By 2020 over 55m of the total population of the US will be 55+

• Customer needs have been and will continue to be more intensive in lower income and chronic regions.

• Elderly buying behaviors and needs will remain a key factor with employer subsidized customers.

• Entering this growing market was key to Cigna’s overall growth strategy. (Share Holders and Board key directive)

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Senior Segment – Stakeholder View – Direct Customer Perspective

“Tomorrow’s seniors will be looking for product and technology solutions that enable them to live their lives through financial security and improved health”Plan

Values

Technology

Health Care and the Web

Personal Values

Freedom and Security

Hesitant

Possibly Research and Purchase

Aid From Others to Manage My Health

Financial Security and Doctor Access

Engaged

Health and Health Plan Independence

Today’s Customer

Tomorrow’s

Customer