(Corrects paragraph 10 to say Time Warner Inc, not Time WarnerCable, plans to transfer retirees to private insuranceexchanges)
Sept 9 (Reuters) - Shares of Towers Watson & Co jumped as much as 10 percent on Monday after IBM said itwill move its U.S. retirees to an insurance exchange owned bythe employee benefits consultant.
Insurance exchanges help consumers compare insurance plansand enroll in coverage. They are the cornerstone of PresidentBarack Obama's healthcare reform that aims to roll out insurancecoverage to all Americans.
Towers Watson said it operates the largest private Medicareexchange in the United States.
IBM said on Friday it will shift its U.S. retirees off itscompany-sponsored health plan to Towers Watson's insuranceexchange, Extend Health, saying the plan offered IBM retireesmore choice and better value than the company could providethrough existing group plans.
The contract, which will add about 110,000 members accordingto Deutsche Bank analyst Paul Ginocchio, is great news for thenewly set up health insurance exchanges and a big win for TowersWatson.
"Towers Watson's exchange currently serves over 500,000lives, primarily retirees. IBM represents about 20 percentgrowth by itself," SunTrust Robinson Humphrey analyst TobeySommer wrote in a note to clients.
However, skepticism about insurance exchanges remain, withmany top insurers preferring to watch from the sidelines untilthey prove to be successful.
"Ultimately, about all of the 12 million retirees who areeligible for Medicare will probably be on exchanges. Right nowwe estimate that about only one in ten are on exchanges," Sommersaid.
IBM said its retirees had a more positive outlook once theywere presented with the concept and understood the optionsavailable to them through these exchanges.
On Sunday, Time Warner Inc said it was also planningto transfer retirees to private insurance exchanges.
Towers Watson's shares were trading up 6.6 percent inafternoon trading at $90.38 on the New York Stock Exchange onMonday. (Reporting by Esha Dey and Mridhula Raghavan in Bangalore;Editing by Sreejiraj Eluvangal)
- Health Care Policy
- Towers Watson
- Time Warner Inc