UPDATE: Shares of Cigna are up around $3.75, to above $132, since May12, when two analysts who met with Aetna Corp. bosses told clients there's a high probability Aetna will buy Cigna or another big insurer soon.
"UBS analyst A.J. Rice wrote in a note to investors that Aetna 'expressed confidence that its balance sheet is strong enough to pursue any attractive consolidation opportunity that arises,' and that Cigna has 'consolidation potential,' the Hartford Courant wrote here.
EARLIER: "Analysts predict Aetna is planning to acquire another [health insurer], likely Humana or Cigna, a move that promises to disrupt the industry," writes Melissa Winn here in Insurance Networking News.
Both Aetna and Cigna are based in Connecticut but have major back-office operations (and former headquarters) in the Philadelphia area, which may be targets for consolidation if they combine. Cigna remains a tenant in Center City's Liberty Place and at suburban locations but has cut back from the 1990s when it was the city's largest corporate employer; commercial real estate agents are concerned it's cutting back again. The former US Healthcare headquarters in Blue Bell has remained a major Aetna office center since the health insurers merged in 1996.
"A consolidation with one of the two carriers is an 'imminent' possibility," the News adds, citing a report by Ana Gupte, an analyst at Leerink Swann. "The analyst group met Monday with Aetna management, including its CEO, CFO, president and senior operations head. Gupte [told clients in a report that] "large-scale horizontal consolidation appears high on the Aetna management agenda."
The merger raises a host of competive concerns for hospitals and other medical providers, insurance brokers, and employers and individual insurance buyers. "Cheap debt makes a deal with either Humana or Cigna 'meaningfully accretive possibilities,'" for Aetna stock, Gupte wrote, boosting her Aetna share price target to $135, from $130.