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Southern Cross purchase of Aetna approved

By Phil Boeyen, ShareChat Business News Editor

Friday 13th October 2000

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Southern Cross Insurance has been granted Commerce Commission approval to acquire its competitor, Aetna Health, as long as it divests all of the medical insurance policies of Aetna members.

In its third application to acquire Aetna, Southern Cross said it would also keep the Aetna medical insurance business separate from its own during the sale process, and ensure that Southern Cross does not have access to confidential and commercially sensitive information about Aetna policy holders.

Southern Cross said its broad reasons for the acquisition were to acquire Aetna's information technology system and then use it to upgrade its own system, and to acquire Aetna's health management business so that it could expand its own business lines.

Aetna and Southern Cross are the two biggest providers of medical health insurance in New Zealand, and the Commerce Commission had been concerned that the merged company would have had a dominant market share.

In its first application Southern Cross said nothing about divesting medical policies, and in its second application only that it would divest "a number" of the policies.

However now that it promises to divest all of Aetna's medical policies the acquisition has been given the go-ahead.

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