Merger Rumors Swirl Around Cigna and Humana

The Wall Street Journal has reported that two of the major managed-care organizations that we cover—Cigna and Humana—are in merger talks that could be completed by the end of this year. Both Cigna and Humana have narrow moats surrounding their businesses, which primarily consist of medical insurance, pharmacy benefit management, or PBM, and healthcare service operations. Given how speculative this potential deal is at this stage and the antitrust concerns that would likely surround this combination, we are not changing our fair value estimates on either firm.