Tower eyes Aetna's health clients

Wellington-based Tower Corp wants to buy Aetna's 40,000 health insurance customers from industry heavyweight Southern Cross Healthcare.

Southern Cross was recently given approval by competition watchdog the Commerce Commission to buy American-owned Aetna providing it sold off the insurer's 40,000 policies.

Tower chief executive James Boonzaier says his company has already looked over Aetna and can see benefits from buying it.

But a sale depends on price and conditions, he says.

Southern Cross chief executive Roger Bowie recently said that price was the only criterion for selling Aetna policies.

Last month, Tower paid $16 million for Axa Health and is assimilating it.

Mr Boonzaier says an extra 40,000 Aetna customers would fit nicely with Tower.

With Axa and Aetna no longer in the picture, Tower is the No 2 health insurer behind Southern Cross.

Mr Boonzaier says it is difficult to compete against Southern Cross because of its size and tax-free status.

Southern Cross is a not-for-profit organisation.

But Mr Boonzaier is optimistic about the health insurance sector, saying people are prepared to pay to get access to treatment without having to wait in public hospital queues.

Complicating the Aetna sale in the short term is an appeal by Southern Cross to overturn earlier rulings by the Commerce Commission.

Southern Cross wants to hold on to some of the Aetna customers and has appealed to the High Court.

No court date has been set for a hearing.

As the deal stands, Southern Cross retains Aetna's advanced computer systems and First Health, an administration service for doctors.

However, even if forced to sell them now, Southern Cross believes it could attract some of those 40,000 customers back over time.

- NZPA