UnitedHealth's $2.6 billion Buyout of Sierra Health a Good Bet

UnitedHealth Group’s pending $2.6 billion acquisition of the Las Vegas-based Sierra Health Services is a strategic move affording it access to among the fastest-growing markets in the United States. In an exclusive article in this week’s BestWeek, industry observers speculate about more managed-care mergers ahead and note the smaller Sierra offers UnitedHealth a business model the other large publicly traded companies may find hard to match.

UnitedHealth wants to be big everywhere, and because it was lacking in size in the Nevada area, the deal makes sense, said Donald Light, a senior equity analyst with Celent. With Sierra, UnitedHealth becomes the dominant player in Nevada’s employer market, he said.

Also featured is Best’s Insurance Composite Index, which finished the week of March 15, 2007 at 1,295.24, up 6.79% from a year ago. The composite index reflects the performance of 183 insurance stocks. The week’s top performers were Sierra Health; National Interstate; Fairfax Financial Holdings; Affirmative Insurance; and China Insurance International. The bottom five were Conseco Inc.; Progressive; Penn Treaty American, NIPPONKOA Insurance and Axa.