In sync with its long term strategic goal of expanding its international business, U.S. health insurer Aetna Inc. (AET) yesterday announced to acquire U.K. based InterGlobal Group.
Aetna has specifically picked up expatriate insurance specialist InterGlobal, since it has a well-established presence in Africa, Asia Pacific, Europe and the Middle East. The buyout will enable Aetna to instantly expand its global base by 65000 members.
Though the cost of the deal has been kept under wraps, it has been revealed that the transaction will be funded internally and that the buyout will see light by the first quarter of 2014. However, the acquisition will not be accretive to Aetna’s 2014 earnings.
Aetna has the second highest exposure in the international market among health insurers, a market which is expected to grow faster and at higher margins.
Earlier in May 2013, Aetna expanded its presence in the Saudi Arabian market by forming an alliance with Tawuniya for health care benefits and services to residents.
Along with penetrating new geographies Aetna has also appointed a new head to steer well its international division. In Jun 2013, the company appointed Richard di Benedetto, with in-depth experience in the health care industry, to head the division.
Aetna currently has insurance licenses in several countries and does business in over thirty countries.
Given significant regulatory pressures back at home due to the Affordable Care Act, U.S. health insurers are flocking to overseas markets which offers attractive margins. This strategy is also being adopted by players like UnitedHealth Group Inc. (UNH), and CIGNA Corp. (CI) among others.
Aetna carries a Zacks Rank # 3 (Hold). Better ranked stock, Assurant Inc. (AIZ) with Zacks Rank #2 (Buy), among others, is worth considering.
Zacks Investment Research
- Health Care Industry
- Personal Investing Ideas & Strategies