Cigna Group (NYSE:CI) and Humana Inc (NYSE:HUM) are reportedly discussing a merger deal to create a new powerhouse in the health insurance industry. 

The companies are discussing a stock-and-cash deal that could be finalized by the end of the year, the Wall Street Journal reported, citing people familiar with the matter.

A combination of the managed-care providers would be huge, given Cigna's market value of about $84 billion and Humana's with around $63 billion.

The merged entity would possess considerable scale, posing a formidable challenge to established giants like UnitedHealth Group Inc (NYSE:UNH) and CVS Health Inc (NYSE:CVS).

With Cigna's robust pharmacy-benefit unit and commercial insurance strength coupled with Humana's substantial Medicare segment, the collaboration aligns strategically, addressing Cigna's longstanding pursuit of expanding its Medicare Advantage unit.

Cigna and Humana had considered merging back in 2015. However, Humana decided to partner with Aetna instead, as the deal was halted due to antitrust concerns, leading to Aetna being acquired by CVS in 2018. 

Another attempt to merge Cigna with Anthem, currently known as Elevance Health Inc (NYSE:ELV), also fell through due to an unfavorable antitrust ruling.

Recently, Elevance Health and Cigna's Express Scripts ended their prolonged legal battle by settling the last unresolved claim in a contentious contract dispute, paving the way for Elevance to appeal the dismissal of its massive $14.8 billion lawsuit alleging overcharging by Express Scripts for prescription drugs.

Humana's CEO Bruce Broussard announced to step down in the second half of 2024. The company has appointed Jim Rechtin as President and COO, effective January 8, 2024, as part of a CEO transition plan. 

Rechtin will eventually take over as CEO, with the current CEO, Bruce Broussard, remaining as a strategic advisor until 2025.

Price Action: CI stock is down 5.6% at $269.99, and HUM shares are down 1.17% at $504.48 on the last check Wednesday.