Calif.’s insurance commissioner urges DoJ to block Anthem-Cigna deal

Calif.’s insurance commissioner urges DoJ to block Anthem-Cigna deal

California’s insurance commissioner Dave Jones urged the U.S. Department of Justice (DoJ) on Thursday to block Anthem Inc’s acquisition of Cigna Corp., saying the proposed merger of the two health insurers would hurt competition.

The Anthem-Cigna merger deal was announced in summer last year. If the deal is approved, the merged entity would control nearly 61 per cent of the administrative services market in the state. The deal is under consideration by the Justice Department.

Jones said he was concerned that the deal would result in increase in insurance premiums in the state, adding that there were no divestitures which could improve the situation in the state.

Urging the Justice Department to block the deal, Jones said, “California has a highly consolidated insurance market today. This merger with Anthem and Cigna will only make that situation worse.”

When contacted for a comment on the matter, Anthem argued that the California Department of Insurance’s opinion wasn’t based on the true merits of the proposed transaction. The company claimed that its highly complementary nature and restricted overlap of organizations would benefit the already competitive health insurance markets.

Anthem shares gained 1.2 per cent to close at $132.24, while shares of Cigna jumped 1.2 per cent to close $128.12 per share.