Just two weeks into the final quarter of the year, mergers and acquisitions activity among U.S. health insurers in 2012 could best high-water marks set nearly a decade ago, according to Charlottesville, Va.-based SNL Financial L.C.M&A deals in the managed care sector so far this year already have reached an aggregate value of $13.4 billion, the highest mark recorded since 2007, according to an SNL report released on Friday. By year’s end, the report predicts, M&A deals could top valuations recorded in 2003, a year that included the $16 billion merger between Anthem Health Networks and WellPoint Inc.Among the largest deals announced so far this year were Aetna Inc.’s agreement to buy Coventry Health Care Inc. for $7.3 billion and WellPoint Inc.’s proposed purchase of the Amerigroup Corp. for an estimated $4.9 billion, the report said.Analysts said the increased consolidation witnessed in 2012 has been driven largely by insurers hoping to expand their Medicaid enrollments, particularly in light of the U.S. Supreme Court’s June 28 ruling on the Patient Protection and Affordable Care Act. Upon completion of the Amerigroup purchase, WellPoint stands to grow its affiliated Medicaid enrollments to more than 4.5 million beneficiaries, while Aetna’s purchase of Coventry will see its Medicaid enrollments grow by an estimated 4 million members.SNL cited a report by Irving Levin Associates as a contributing source for its analysis.
Editor’s Note: Health insurers are hedging their bets. Some are expanding overseas. Others are vying for lucrative government health insurance contracts. What both strategies have in common is the understanding that the role of health insurance companies in the United States is undergoing a fundament change. Others are getting out of the life & health business altogether and focusing on property-casualty lines.