Aetna to Buy New York Life Health-Care Unit

Aetna Inc. said it will pay $1.05 billion in cash for New York Life Insurance Co.’s health-care unit, which Aetna expects to bring $45 million to $55 million in cost savings. The price could increase by as much as $300 million if the NYLCare Health Plans unit reaches earnings and enrollment targets during the next two years, the companies said. Aetna officials said the insurer would cut an undetermined number of NYLCare jobs. The purchase would increase Hartford, Conn.-based Aetna’s market share in such major markets as New York, the Washington-Baltimore area and Texas, while allowing New York-based New York Life to focus on life insurance and annuity sales and to strengthen its money-management businesses. The agreement has been approved by the boards of both companies and is expected to be completed in the third quarter of 1998. Aetna shares rose 25 cents to close at $84.56 on the New York Stock Exchange.