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Seniors Segment Strategies, Trends, Competitors, and Other External Factors

Seniors Segment Strategies, Trends, Competitors, and Other External Factors Thursday, October 3, 2013. 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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Seniors Segment Strategies, Trends, Competitors, and Other External Factors

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  1. Seniors Segment Strategies, Trends, Competitors, and Other External Factors Thursday, October 3, 2013

  2. Senior Segment - Agenda • Overview • Core Strategies • Value Proposition • Recent Driver Performance • Us vs. Them • SWOT Analysis • Stakeholder View • Vision • Direct Customer Perspective

  3. 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

  4. Senior Segment – Core Strategies Enablers – People & Technology

  5. 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 analytics Create value for customers with products and services that fit their needs and improve well-being Align customer and provider incentives to drive improved outcomes and promote healthier living

  6. Senior Segment – Recent Driver Performance Cash Growth Profit -Unlike competitors using cash to execute growth strategy -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 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 People -Dramatic increase in customers and caregivers Assets -Medicare plans, HealthSpring operations, Health Spring Clinics

  7. 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

  8. 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

  9. 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)

  10. 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 Freedom and Security Financial Security and Doctor Access Technology Hesitant Engaged Health Care and the Web Possibly Research and Purchase Health and Health Plan Independence Aid From Others to Manage My Health Personal Values Today’s Customer Tomorrow’s Customer

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