Anthem to buy Cigna to create biggest US health insurer

Anthem said Friday it would buy Cigna in a deal valued at $54.2 billion, creating the largest U.S. health insurer by membership.

The deal — the biggest ever in the health insurance industry — comes three weeks after Aetna agreed to buy Humana for $37 billion and is part of an industrywide consolidation following the roll-out of President Barack Obama's health care law.

Antitrust authorities are expected to aggressively scrutinize how the combinations will affect competition for Medicare and individual and commercial insurance.

By most measures, U.S. insurance markets are extremely concentrated. That means companies could have trouble selling assets if forced to do so by antitrust regulators.

Anthem said it expects the deal to close in the second half of 2016, indicating a long regulatory road ahead.

Anthem and Cigna are two of just four major insurers that administer self-insured plans for major companies. The other two are UnitedHealth Group and Aetna.

UnitedHealth is currently the biggest U.S. health insurer by membership, while Anthem and Cigna rank No. 2 and No. 4.

"When you go from four to three national players, that creates a significant issue," said Matthew Cantor of law firm Constantine Cannon LLP.

Anthem said it was confident it would get all necessary regulatory and other approvals.

The combined company would have about 53 million members. UnitedHealth had 45.86 million members as of June 30.

Growing concerns about market concentration came into sharp focus earlier this year when regulatory concerns scuttled Comcast's $45 billion bid for Time Warner Cable.

Reuters