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Aetna eyeing NY Life unit
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March 2, 1998: 1:15 p.m. ET
The 13.7 million-member health-care titan may bid $1 billion for NYLCare
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NEW YORK (CNNfn) - Aetna Inc. is in negotiations to buy New York Life Insurance Co.'s health-insurance business for about $1 billion, and could sign an agreement in the next few weeks, according to published reports Monday.
Aetna's acquisition quest comes at a time when the company, which has 13.7 million health-plan members, including 5 million in health maintenance organizations, is said to be seeking buyers for its individual life-insurance business.
That sale could fetch as much as $1.2 billion, but reportedly is unrelated to Aetna's campaign to acquire NYLCare, the health-care subsidiary of New York Life. Those familiar with Aetna say it could finance the acquisition without relying on peripheral sales.
Aetna's overtures to New York Life come as price pressures in the fiercely competitive health-care industry are spurring consolidation. At the same time, many companies, Aetna included, have faced nettlesome integration problems.
Hartford, Conn.-based Aetna has struggled to digest U.S. Healthcare Inc since acquiring the company for $8.2 billion in 1996. Meanwhile, Oxford Health Plans has been mired in financial woes tied to a delayed-payment debacle apparently caused by a glitch in a computer system.
NYLCare, with about 2.5 million members -- 60 percent of whom are in HMOs -- ranks among the nation's largest health-care providers.
On Saturday, the New York Times reported that New York Life's recently arrived chief executive, Sy Sternberg, had refocused the company on insurance, annuities and mutual funds. This obviated the need, the paper reported, for NYLCare, which lost $30 million on $3 billion in revenue in 1997.
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