Sale may prompt buyout of Aetna

Aetna Health (NZ), the country's second-biggest health insurer, is bracing itself for fallout from the sale of its US-based parent's financial services and international operations to Dutch insurer ING Groep.

Consummation of the $17 billion deal is expected to be announced today.

Speculation is mounting that Aetna's New Zealand operations will be sold, with the country's biggest health insurer, Southern Cross Healthcare, tipped as the likely buyer.

Aetna's New Zealand chief executive Steven Goldberg said he was aware that the parent company was being bought by ING.

"That's the only deal currently coming out that I'm aware of."

Southern Cross chief executive Roger Bowie did not return calls last night.

Any deal would require Commerce Commission approval, with the combined entity controlling close to 80% of the $500 million health insurance market.

Health Funds Association executive director Andrea Pettett said mergers and takeovers within the industry were expected.

While she had no knowledge of any takeover of Aetna, the market was very competitive, and while growing bigger was no guarantee of greater profitability, a bigger pool of customers enabled an insurer to better balance its risks.

Last year, the association reported half a million New Zealanders had pulled out of schemes since 1990, with hefty premium rises during the mid-90s the catalyst. Ms Pettett said the decline had bottomed out and the market was beginning to grow again.