Cigna (CI) and American Financial Group (AFG) announced Thursday that CI will purchase AFG’s Medicare Supplement and Critical Illness businesses for $295 million. These businesses, known as Great American Supplemental Benefits Group and headquartered in Austin, TX, have historically been a market leader in Medicare Supplement. In recent years, they have marketed primarily through their Loyal American subsidiary.

Great American’s Medicare Supplement earned premiums in 2011 were $290 million in 2011, down from a high of $320 million in 2005. Great American’s 2011 Medicare Supplement earned premiums ranked 16th in the overall market.

Cigna will be adding approximately 100,000 Medicare Supplement lives from Great American to its existing Medicare enrollments of 400,000 Medicare Advantage lives and 1.3 million PDP lives.

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