By Caroline Humer
Aug 4 (Reuters) – Aetna Inc Chief Executive Mark Bertolini said on Tuesday the company is talking to federal and state officials on its $37 billion acquisition of Humana Inc and that there is enough insurance competition for it to receive approval.
“The process is underway. We’ve engaged in conversations with insurance commissioners, with governors, with Washington,” Bertolini told investors during a conference call to announce the company’s earnings.
“We’re doing deep analysis, even deeper than we did before the deal on the number of competitors by market,” he said. If Aetna or Humana need to divest in a market because of the competitive dynamics, “there will be plenty of competitors in each market,” he added.
Investors expect regulators and states to push back on the combination of the company’s Medicare Advantage offerings. It will become the largest provider of these plans and in some states, will have dominant market share.
Aetna shares were unchanged in late morning trading after it announced second-quarter profit rose beyond Wall Street expectations, suggesting that investor worries about the antitrust prospect are still at the front of their minds.
“I think people are looking for more than just assurances from management,” said Ana Gupte, analyst at Leerink Partners. “They want to see some actual progress on the regulatory process” which could take until next year, she said.
Aetna has filed its initial antitrust documents with federal regulators and has begun to make the needed filings with state insurance regulators in about 20 states, Bertolini said.
Aetna has spoken with many governors and generally those conversations have been positive, Chief Financial Officer Shawn Guertin said in an interview.
Governors of states have a variety of concerns, from jobs to insurance offerings to price stability, he said.
The regulatory process is expected to take at least a year. Aetna’s acquisition will be reviewed by the Department of Justice as well as state insurance regulators who oversee the commercial insurance industry. Aetna expects to close the deal in the second half of 2016.
Bertolini said Aetna will likely need to divest assets in some markets – as Wall Street analysts have suggested – but that in all, the company will have about 8 percent market share of the overall Medicare market, which includes both Medicare Advantage and Medicare fee for service.
Antitrust regulators will also be looking at Blue Cross Blue Shield insurer Anthem Inc’s acquisition of Cigna Corp’s at the same time as Aetna’s Humana