David Cordani
Cigna CEO
Early Life
David Cordani was born to a working-class family in the industrial city of Waterbury, Connecticut during the mid-1960s. His father made a modest living as a police officer, while other relatives toiled away at nearby copper and brass smelters, for those unfamiliar with that factory terminology, the labor has to do with extracting metal from its ore by a process involving heating and melting.
“I was raised in a simple blue-collar family with my parents and grandparents, of which, the latter were immigrants,” he shares. “My grandmother instilled in us three boys, and I’m the middle brother, the golden rule and the responsibility we have to help people. I didn’t understand it as a kid, because it was little things we did…but now I get great fulfillment and satisfaction out of it. I say, to give, to get – the giver actually gets more than the receiver in my point of view, most people think it’s the other way around.”
David left New England for the Lonestar state after graduating from high school, choosing to enroll in accounting courses at Texas A&M’s Mays Business School. Considering his mother’s authentic Italian cooking was absolutely phenomenal, indulging in copious amounts of the cuisine left him in a compromised position when it came to physical health – he was 50 pounds overweight.
“I’m currently a pretty skinny guy at six feet tall and 170 pounds but up through my freshman year of college, I was about 50 pounds heavier,” he reveals. “That’s when I took up running, I thought to myself, I want to have a long life. It was selfish, I want to have a long life. I still eat sweets, I love chips, I eat bad food, and I have a basic life adage, ‘I eat to workout, I workout to eat.’ The more I workout, the more I eat, the less I workout, the less I eat. Since I like to eat, I workout a lot.”
The Ironman and Triathlons
Playing recreational basketball in the school gym took a toll on Cordani to the point that a doctor informed him, he couldn’t run anymore. “I watched the Hawaiian Ironman on TV,” he remembers. “I had this kind of sappy moment by myself watching it, and I said to myself, I’m gonna do that someday.”
A triathlon is an endurance multisport race consisting of swimming, cycling, and running over various distances. Today, an Olympic-distance triathlon consists of a .93 mile (1.5K) swim, a 24.85 mile (40K) bike ride, and a 6.2 mile (10K) run. That next year, the young man completed his first sprint triathlon, followed by an Olympic triathlon, and then a half-ironman.
The Ironman Triathlon is widely considered one of the most difficult one-day sporting events in the world. It is a series of long-distance triathlon races organized by the World Triathlon Corporation, consisting of a 2.4-mile swim, a 112-mile bicycle ride, and a marathon 26.22-mile run, raced in that order. Cordani clocked a remarkable 12:16:59 at the 1995 Ironman Triathlon in Hawaii and by 2019 had competed in over 125 triathlons, literally bringing to immaculate fruition the vision that seemed so distant on one particularly heartwrenching evening in his college quarters’ living room.
Not only was it medically advantageous, but these races also evolved into a form of stress management for him. They enabled him to sharpen his resiliency, boost energy levels, and learn a variety of invaluable character attributes that he would ultimately implement into his work habits.
“It became a way of life, and from a business standpoint it’s similar,” he explains. “You have a goal, you set a strategy, you put a plan together, you execute the plan, go on the racecourse, and there’s always a negative surprise, something unexpected always happens on the course and you have to overcome that, relative to the goals you have in front of yourself.”
Career
David Cordani earned his undergraduate degree from Texas A&M in 1988 with a double major in accounting and finance. He went on to work for Coopers & Lybrand Consulting, an exceptional accounting firm that existed until its 1998 merger with Price Waterhouse, once combined, the company was named PwC and is now bringing in $43 billion worth of annual revenue. Cordani left the company after ascending to the role of senior auditor in 1991, he had a desire to help people more directly.
“I was fortunate in that I left here with a great foundation of skills and experiences and most importantly a lot of what I would call the ‘X Factor of Texas A&M,'” he told a crowd of aggies at a speaking engagement. “I was bitten by health care because health care was an opportunity to touch and change people’s lives in a very intimate way.”
Cigna
Changing industries entirely, David diligently searched for a medically driven company whose vision aligned with his new-found purpose. He joined Cigna in 1991, and held management positions across the business throughout his early career, in areas including distribution, clinical management, underwriting, finance, and operations.
“I came to Cigna because the leadership development program and a track record of taking people and putting them in diverse roles,” he remembers. “I wasn’t really thinking that I was moving to a job, per say, but I was joining a team that would have a series of opportunities, challenges, and some support around that.”
Growing with Cigna
Whether David Cordani was aware of Cigna’s revenue-rich future or not, he got a front-row seat to its transformation into one of the largest health services enterprises on Earth. In February of 1996, they expanded their health maintenance and health insurance operations with the $1.7 billion acquisition of Healthsource Inc.
Then that same summer, in a flash of brilliance that both nearly made up for their purchasing costs and implied a fine-tuned approach to the patient-centric medical sector, Cigna sold most of their individual life insurance business to Lincoln National Corporation for $1.4 billion, a total worth about three times more than the division’s actual book value. Additionally, the company was able to hang on to $225 million of the unit’s accumulated capital, which ultimately produced a net of $1.6 billion in the deal.
Continuing this trend of shedding off projects that weren’t mortally aligned with their health care and employee benefits businesses, Cigna agreed to sell its property and casualty insurance division to Ace Ltd. of Bermuda for $3.45 billion in January of 1999. As noted by the Los Angeles Times, the sale marked the end of an era that began in 1792, when the Insurance Co. of North America (a corporate ancestor of Cigna) began to issue maritime insurance policies.
With about 70% of its business in health care and the rest in other types of employee benefits such as retirement plans, Cigna positioned itself to be marketed as a sort of one-stop insurer for employers. All the while, Cordani’s openness to new opportunities helped him soar through the company’s leadership ranks, and although his career accumulated decades under the same organization, it was constantly evolving and never static in any way, shape, or form.
“I worked in human resources for two and a half years, I worked in investment operations for a couple of years, I had a technology set of responsibilities during a real crisis period, as a non-technologist, and I worked in classic financial jobs,” he tells a crowd of burgeoning Cigna employees. “All of them pushed me out of my comfort zone in a variety of wonderful ways but also continued to build on a base of experience.”
The Healthy Habits of David Cordani
In 1995, the same year he clocked his 12:16:59 Ironman Triathlon time, David Cordani earned an MBA from the University of Hartford. The man’s tireless work ethic straddles a delicate equilibrium linking professional and athletic goals, we are unsure if successes in one fuel the other more, however, they are certainly married to each other in some eternally dependant way, reminiscent of ancient yin and yang dualism.
“An average day for me is an hour workout in the morning before I start my day – no matter where I am in the world – to get that not just physical activity but stress reliever and quality of life,” he revealed in an email to Business Insider. “I’m a big believer that there’s always a way to get in a workout. I’ve had hotels open their gyms ahead of schedule when the gym hours don’t align with my work schedule. And when I’m at a hotel without a gym and exercising outdoors isn’t an option, I’ll run the stairs [10 flights, 100 times].”
A mental health hack he employs is the power of micro-communities: close-knit groups of people with similar interests that provide support and guidance on route to tackling a goal. This lesson took significant form when he had the privilege to serve as running guide for Master Sergeant Cedric King, a veteran who lost both his legs during a wartime incident, at the 2019 Marine Corps Marathon.
“When times get tough, and you don’t think you can take another step forward, the reason you keep going is because someone believes in you,” Cordani discusses in a self-penned piece published to the marine corps marathon blog. “Maybe it is a teacher, or a coach, or a parent, or a relative, or a friend…whatever the case, one person can make the difference between going and quitting.”
Loss of Members
The fall of 2002 saw Cigna admit they’d be losing north of five hundred thousand members by years end, meaning the health giant would no longer be the world’s third-largest health insurer – falling behind UnitedHealth Group, Aetna, and Wellpoint Health Networks, respectively. In total, the company lowered its official membership count from 14.15 million to 13.25 million.
“There were just some flat-out poor judgments,” H. Edward Hanway, the chairman and chief executive of Cigna, said in a conference call with analysts. According to Cigna’s chief financial officer, James Stewart, the company lost $40 million to $50 million that year after it cut prices and the costs for thousands of new members were higher than expected. When Cigna then raised its rates, some of these customers switched to other insurers.
Per the New York Times, more than half the loss came on the worst case of abandonment, which analysts identified as the Dade County school employees in Miami. A consultant to the Dade schools reveals Cigna lost $50 million there. Why did Cigna raise its prices? The simple answer is, they ran a number of calculations and discovered, despite being profitable through all lines, that their services were underpriced by market standards.
As Hanway points out, they probably could have gone about raising their rates in a much more gradual, considerate, or even well-thought-out manner. On another hand, while the membership crisis ensued, profit margins fell, leading to thousands of layoffs within the company throughout the 2000s.
David Cordani Plots a Turnaround
By June of 2005, membership dropped below 9 million, thrusting the company into a panic and causing Hanway to step down from leading the health care business. That July, the board named David Cordani president of Cigna HealthCare, his history in diverse roles such as senior vice president of customer segments and marketing, Cigna HealthCare chief financial officer, president of the Southeast region, controller for parent Cigna Corp, and more produced for him an intimately acquired repertoire of invaluable veteran knowledge he could pull from when implementing a turnaround plan which would require taking into account potentially inadvertent effects on each of Cigna’s divisions.
“Our objective is to not compete on price alone,” and Cigna doesn’t expect to be the lowest-priced player, Cordani said. Rather, “Cigna will offer a competitive price point with the highest clinical quality” through its programs and services. One key to the reassigned executive’s multifaceted approach was making sure individual members became more engaged, educated, and enabled.
“After all, getting and keeping people healthier ultimately will drive costs down,” he told the Hartford Courant, while also giving them an inside scoop as to how he juggles so many challenging responsibilities. “A lot of it has to do with day-to-day re-prioritizing, making sure I’m real thoughtful in terms of what’s important, whether it’s at home, here with my team, or with my customers. It’s a marathon, it’s not a sprint. You’ll blow up if you try to do too much too quickly.”
Cigna Chief Executive
The great recession came in 2008, dashing net revenue from $1.1 billion in 2007 to $292 million by 2009, the stock price from a high of $56.36 a share to a decade low of roughly $9 per share, and any hopes of an expedient turnaround. A major reason health insurers were hit hard by the teetering economy was due to employers laying off staff, which in turn, drove down insurers’ enrollment.
On June 24th, 2009, Cigna put out an official press release announcing that chief executive H. Edward Hanway arranged to retire from his posts effective December 31, 2009, and his incoming successor would be none other than David Cordani.
“The mission of our company will not change and does not change,” Cordani said, “and that is: We built the company here to improve the health, well-being, and sense of security of the people we serve.”
Only a few months into his tenure, Congress passed the “Affordable Care Act,” an industry-shaking comprehensive health care reform law that addresses health insurance coverage, health care costs, and preventive care.
Thankfully, Cigna mainly administered insurance policies for big businesses, an area little affected by the health-care overhaul, explains the Wall Street Journal. Meanwhile, the new regulations being established put competitors who were already selling to small firms and individuals in a compromised position, forcing them to consider making alterations to their business models.
Key Decisions by David Cordani
“I don’t have to protect a model that might be going away; I get to look at the model that’s unfolding and determine how to play with it,” Cordani said in a 2010 interview. Weaving his way through this tumultuous period, Cordani hoped to focus on expanding the company’s employer-based health care in specific geographic regions where the opportunity presented itself.
“Our enrollment numbers are actually up. So far this year [2010], we’ve added just shy of a quarter-million new lives in the U.S. from health care,” he revealed. “It’s less driven by the employment landscape and more by strong retention levels of existing employees and an uptick in our target geographies.”
For example, among businesses with 250 to 5,000 employees, their growth rate in 2010 was 6% in an environment with no organic growth. If you take another segment with 51 to 250 employees, they focused on emphasizing just 15 particularly unique markets. In those 15, they experienced 5% growth in markets where there was essentially no overall economic growth. Finally, for the first time in a long while, the battered Cigna ship saw daylight and a route out of seemingly everlasting choppy waters.
Acquisitions & Mergers
Cigna made its first big acquisition under Cordani in 2011 with the purchase of HealthSpring Inc. for $3.8 billion. The idea was to get a head start on selling Medicare plans as more elderly post-war baby boomers became eligible for the U.S. government program.
Then came Anthem’s 2015 agreement to purchase Cigna for a whopping $48.4 billion! The deal would combine the second and fifth-largest health insurers by revenue and create a goliath in commercial insurance with $115 billion in projected annual revenue and about 53.2 million members covered.
Around that time, the U.S. Department of Justice sued to block the deal for antitrust reasons. MedCity News documents that Cigna filed a suit against Anthem in 2017, seeking to terminate the merger agreement, while Anthem filed its own suit to keep the merger in place and appeal the DOJ’s lawsuit.
Although Cigna sought $13 billion in damages for the loss to shareholders and Anthem subsequently sought $21 billion, claiming Cigna sunk the deal on purpose, a Delaware judge ruled in 2020 that neither Anthem nor Cigna would be able to collect their desired billions in damages over the failed merger. They’d have to break up once and for all and get over it.
As the legal battle drew out, Cigna managed to negotiate a staggering $52 billion deal to buy Express Scripts, the nation’s largest pharmacy benefit manager; a company ultimately responsible for the prescription plans of more than 80 million Americans.
“This step furthers our strategy to improve the affordability and value to the consumer in a more personalized way,” said Cordani. The successful decisions Cigna’s executive team has been making over the past decade speak for themselves, Cigna stock traded at $33.77 a share in January of 2010 when David Cordani first took over, as of March 30, 2021, the stock is sold at $246.29 per share.
Check out this recent interview between Yahoo Finance’s Brian Sozzi and Cigna CEO David Cordani, where they discuss the ongoing impact of the COVID-19 pandemic on the health insurance industry as well as the future of Cigna and telehealth:
Philosophy on Health Care
In order to produce a single comprehensive text summing up the thoughts of David Cordani on the future of healthcare, we’ve parsed together several statements he made during a speaking engagement with the Economic Club of Chicago in 2019. Remember the sentences below were not spoken one after the other and the full context of each word should be taken into account, with this being said, for a more adequate representation of his ideas, please view the entirety of his speech, here.
Full disclosures aside, please enjoy this condensed version:
Healthcare spending is growing at an unsustainable rate, the United States spends way more than all other OECD countries combined in terms of their rate of growth, yet the life expectancy rate in America is not growing at a commensurate level, only outpacing eight of the OECD countries. At our current trajectory, the U.S. healthcare system will consume about 20% of the U.S. GDP by 2026 – this causes constraints around other economic development.
As we work to further evolve our program and our solutions within the United States, we think that the current debate around government-run health care is an incomplete debate at most. Said otherwise, arguing over who finances an unaffordable sick-care system is not sustainable and it doesn’t transform our healthcare system from a sick-care system to a healthcare system – it just shifts the costs and financing.
What doesn’t work, is a passive system that finances sickness, that does not work. We know in the United States, that there are four behaviors that explain approximately 80% of the costs in the commercial population – physical activity, smoking, drinking, and what you eat.
Our society needs to have this conversation, because your health is your most important asset and our next generation’s health is their most important asset; let’s give them a chance to have a vibrant, full of vitality life on a going forward basis. The U.S. healthcare system that largely focuses on sick care is unaffordable and unsustainable, we believe the best path forward is fueling the proven public-private partnerships that exist and working even harder to leverage the power of micro-communities – be it employers or smaller local communities.
We should desire to have the healthiest, most vibrant, highest vitality society in the world. We already have the most innovative society, an unbelievably diverse society, we have something that is admirable, in terms of an experimentation standpoint, in terms of the economy. But we need to flip the energy on its head and desire to have the healthiest, most vibrant, highest vitality society and at Cigna, we challenge ourselves to be a force of good relative to that. We want to change our customers’ lives for the better, that’s what drives us.
If you enjoyed this story on the life of Cigna CEO David Cordani, be sure to check out our biography of another son of blue-collar workers, Kroger CEO Rodney McMullen.