Aetna to buy N.Y. Life business Giant insurer to pay $1.05 billion for NYLCare Health Plans

March 16, 1998|By NEW YORK TIMES NEWS SERVICE

Aetna Inc., the giant health insurer, is expected to announce today that it is buying the health care business of New York Life Insurance Co. for $1.05 billion in cash.

Reflecting some of the negotiating that has gone into the deal and some of the uncertainties in the health care business, Aetna has agreed to pay New York Life as much as $300 million more if the unit, NYLCare Health Plans, meets certain growth targets in the next two years, people close to the transaction said.

The deal would significantly increase Aetna's market share in metropolitan New York, in the Washington-Baltimore area and in Texas. It would also enable New York Life to concentrate on the sale of life insurance and annuities and on strengthening its money-management businesses, including the Mainstay mutual funds.

"This should work out well for both sides," said Kenneth Abramowitz, an analyst with Sanford C. Bernstein & Co. "Aetna will be acquiring more regional strength and more management talent. And New York Life will be getting some funds it can immediately use in its core businesses."

Spokesmen for Aetna and New York Life said company policy forbade them to discuss reports of pending transactions.

Aetna has been negotiating since late last year to buy NYLCare, which provides health insurance for 2.2 million people, including 1.5 million under managed care. Aetna has 13.7 million health insurance customers.

The merger is not expected to have an immediate effect on costs, benefits or physician relationships for customers of the two companies. Eventually, it should provide a wider choice of physicians.

In the Washington-Baltimore area, NYLCare has 477,000 managed-care customers, which would be combined with Aetna's 176,000 to give a combined company 653,000.

Pub Date: 3/16/98

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.