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Cigna trims portfolio by selling Medicare business for $3.7 billion to Health Care Service Corp.

The Cigna Group will sell its Medicare business to another insurer, Health Care Service Corp., for about $3.7 billion.

Cigna said Wednesday the deal includes its Medicare Advantage insurance, a supplemental benefits business and Medicare prescription drug coverage. Medicare Advantage plans are privately run versions of the government’s Medicare program mostly for people ages 65 and older.

Cigna CEO David Cordani said in a statement that his company still sees Medicare as an attractive market, but that business required a focus and resources that were “disproportionate to their size” within the company’s portfolio.

Cigna’s Medicare business has 3.6 million customers, spokeswoman Justine Sessions said. That includes 2.5 million people with Part D prescription drug coverage, nearly 600,000 people with Medicare Advantage and more than 450,000 with Medicare Supplement plans.

By comparison, market leaders Humana and UnitedHealth Group Inc. each have more than 5 million people enrolled just in their respective Medicare Advantage plans

Privately held Health Care Service Corp., based in Chicago, runs nonprofit Blue Cross-Blue Shield coverage in several states. Those include Illinois, Texas and New Mexico.

The companies expect the deal to close in next year’s first quarter. As part of the agreement, Cigna's Evernorth Health Services subsidiary will continue to manage pharmacy benefits for the Medicare business.

Cigna expects to use proceeds from the deal mainly for share repurchases.

Shares of Bloomfield, Connecticut-based Cigna climbed around 1% to $301.71 Wednesday afternoon while the Standard & Poor's 500 index was down 1%.