Two sizable players are expected to account for a big chunk of the health insurance market in Delaware with a cash and stock deal calling for Aetna to acquire Coventry Health Care in a $7.3 billion deal.
Coventry, based in suburban Washington, D.C., has operated in Delaware for many years.
Aetna and Coventry both rank in the top 5 among health insurance companies in Delaware. The largest carrier is believed to be Highmark Blue Cross Blue Shield Delaware. The name reflects the affiliation with the western Pennsylvania-based insurer.
Big mergers had been expected as the provisions of federal health care legislation are phased into law.
The deal is expected to increase Aetna’s share of revenues from government business to over 30 percent from 23 percent currently.
It would also give Aetna a larger persence in Medicaid state health care programs for those with lower incomes. Such programs are targeted to expand as part of health care reform legislation, although states can opt out.
“Integrating Coventry into Aetna will complement our strategy to expand our core insurance business, increase our presence in the fast-growing Government sector and expand our relationships with providers in local geographies,” said Mark T. Bertolini, Aetna’s CEO. “Coventry has distinct capabilities and a local market focus that will accelerate our efforts to bring simpler, more affordable products to consumer insurance exchanges in 2014 and beyond.
The transaction is subject to Coventry stockholder approval, as well as other customary closing conditions, including approval by state insurance regulators. That is expected to push final approval into 2013.
