Analysts: Aetna-Humana Deal Still Probable, Anthem-Cigna Unlikely

Aug. 02--A ratings agency has weighed in on two big insurance deals, saying it believes the Aetna Inc.-Humana Inc. deal will ultimately go through, while the proposed Anthem Inc. acquisition of Cigna Corp. will fail.

Moody's Investors Service said in a research note issued Monday that Anthem's proposed $54 billion purchase of Cigna will probably not be approved.

It cited the Department of Justice lawsuit announced July 21 seeking to block the deal "and the overall negative reaction to the transaction from the healthcare community and politicians."

Federal regulators say the two deals will stifle competition, giving consumers fewer choices.

Analysts Stephen Zaharuk, Scott Robinson and Marc Pinto said in the note that their opinion "also reflects the apparent discord" between Anthem and Cigna.

David Cordani, chief executive of Bloomfield-based Cigna, told analysts Friday that it is "clearly our intent and commitment" to continue working on finalizing the Anthem deal.

He said that if the deal falls through, Cigna will continue its work and he pointedly said Anthem "independently decided" to fight the lawsuit.

Zaharuk, Robinson and Pinto said they believe there is a "reasonable probability" that the proposed $37 billion purchase of Humana by Aetna will be approved. Aetna is seeking the Louisville-based Humana for access to Medicare Advantage, which Moody's said it believes will be divested sufficiently to allay concerns by the Department of Justice.

Moody's wrote last week that the prospects for obtaining approval for the Aetna-Humana deal are "somewhat diminished," but the impact of the Department of Justice lawsuit does not change the underlying credit calculations by Aetna.

"Although no one can predict the outcome of the legal challenge, we think there is a reasonable chance that Aetna may prevail," Zaharuk, Robinson and Pinto said. "In addition, the deal has from the outset been more amicable in nature than the Anthem and Cigna transaction and in our view has received less opposition from the healthcare community and regulators."

___

(c)2016 The Hartford Courant (Hartford, Conn.)

Visit The Hartford Courant (Hartford, Conn.) at www.courant.com

Distributed by Tribune Content Agency, LLC.