Anthem CEO Says Cigna Deal Moving Forward

By Liz Hoffman and Anna Wilde Mathews 

Anthem Inc. Chief Executive Joseph R. Swedish acknowledged "dynamic tension" with Cigna Corp. over their $48 billion pending merger, but said the health insurers had resolved differences and are on track to receive regulatory approval.

The Wall Street Journal reported in a front-page story Monday that Anthem and Cigna were privately sparring on several fronts as they work toward antitrust clearance, citing letters their executives exchanged as recently as this month.

Speaking at an investor conference in New York, Mr. Swedish called the disputes "old news." He said the companies are working well together and have "virtually met all the deadlines up to this point" in the antitrust review by the Justice Department.

He acknowledged disagreements, without addressing them in detail. In the letters, Cigna accuses Anthem of bungling submissions to regulators, while Anthem accuses Cigna of being slow to share information. Mr. Swedish and Cigna CEO David Cordani have also had differences in the 10 months since the deal was struck, the Journal reported.

"You would expect dynamic tension in terms of ultimately deciding what is best-of-breed -- what parts do you keep, what don't you keep, who leads what," he said. He said executives were working to make the integration "as seamless and as smooth as possible, and quite frankly along the way you hit these bumps."

Tom Zielinski, Anthem's general counsel and the author of several of the letters reviewed by the Journal, added that the companies "have worked through our differences of opinion."

A Cigna spokesman had no immediate comment Tuesday.

Cigna shares were little changed Tuesday morning at $126.04. Anthem's fell nearly 2% to $130.87. The gap between Cigna's trading price and the deal's value, which reflects investors' view of the odds it will go through, narrowed by about $1 a share after widening by some $4 Monday.

The Anthem executives said they are confident the deal will receive antitrust approval. Mr. Zielinski said Anthem believed the market for health benefits provided by large, multistate employers "is not a national market." Employers often divvy up their health coverage, using different insurers to administer benefits in different regions, he said.

He said if regulators disagree, there are ways to address Justice officials' concerns. In the letters, Cigna expressed concerns that Anthem hadn't yet prepared a backup plan if regulators sue to block the deal or demand divestitures.

Mr. Swedish said the companies' projected $2 billion in annual synergies from the deal are "still very likely." Such cost savings could be passed on to customers and are seen as key to convincing regulators the deal is pro-competition.

Write to Liz Hoffman at [e-mail] and Anna Wilde Mathews at [e-mail]

(END) Dow Jones Newswires

May 24, 2016 11:39 ET (15:39 GMT)

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