The Connecticut Insurance Department lacks the legal standing to require Aetna Inc. to retain its state headquarters after its acquisition of Kentucky’s Humana Inc., spokeswoman Donna Tommelleo said.
That’s because the acquisition does not involve a change in ownership of any Connecticut-based company, Tommelleo said.
Since only the ownership of Humana is changing, she said in an email, Aetna was required to submit an application, known as a Form E, dealing with how the merger might affect competition in the state,
On Jan. 22, the department made the determination that the proposed acquisition “would not substantially lessen competition or create a monopoly in Connecticut as Humana has a small market footprint in this state,” Tommelleo said.
As part of the department’s analysis process, an economist was hired to provide an independent evaluation, she added.
If Humana had been a “domestic” insurer, that is, based in Connecticut, it would have been required to file a Form A, or “change of control” application, Tommelleo said. That would have involved a public hearing and additional scrutiny of how the merger would affect the state.
Aetna CEO Mark T. Bertolini has said he expects the Humana acquisition to be completed in the second half of 2016.
After the merger, the company plans to base its Medicare and Medicaid insurance-related operations at Humana’s Louisville, Kentucky, headquarters, Bertolini has said.
He has not said whether the company will keep its Connecticut operations, which have 6,500 employees. The Boston Business Journal reported in April that Aetna executives have talked with Boston officials about moving the headquarters there.
Aetna has been based in Hartford since it was founded in 1853.
More clout with Cigna
The Insurance Department has a bit more clout when a Conencticut company is being bought out, Tommelleo said.
The buyout of Bloomfield-based Cigna Corp. by Indiana’s Anthem is pending approval.
Tommelleo said she couldn’t comment on the case because the review is ongoing.
All public documents regarding the review are posted on the insurance department’s website, she said, and more are being added as the review progresses.
A public hearing will be held within 30 days of when the department deems the application complete, Tommelleo said.
Those forms include a statement by Anthem that it has “no current plans or proposals to reduce in any material respect the number of employees employed by the Cigna companies.”
However, Anthem’s filings also include a statement that it “anticipates certain operations of Cigna, such as human resources, payroll, finance, and accounting, may be integrated with Anthem’s existing operations following consummation of the proposed acquisition.”
Cigna has about 4,200 Connecticut employees.
The Insurance Department says in the filings that it is “particularly interested in understanding projected employment figures over the next four years” for Cigna’s Connecticut operations.
It requires Anthem to specify what operations and functions will remain in Connecticut within the next two years, and to provide a three- to five-year projection of the status of the in-state operations.
In a similar “change-in-control” merger, the Insurance Department in May approved the acquisition of the Phoenix Cos. Inc., based in Hartford, by New York’s Nassau Reinsurance Group Holdings.
In that case, the state required that for two years the company file semiannual reports “under oath” about its business operations in Connecticut and any changes.
The state also requires that the insurance company maintain its books and records in Connecticut, “unless otherwise approved” by the department.
