(Reuters) - The financial chief of Anthem Inc , the second-largest U.S. health insurer, said on Tuesday that low interest rates and other conditions make it a good time for an acquisition, adding to speculation about merger activity in the sector.
Cheap debt is creating opportunities for companies to grow through acquisitions, ANTHEM (ANTM.NY)hief Financial Officer Wayne DeVeydt told investors during the UBS Global Healthcare Conference in New York.
"I like the pricing environment a lot and we have a lot of capacity to work with to do a cash transaction of meaningful size - and it would be transformative," DeVeydt said.
DeVeydt's comments came against a backdrop of renewed speculation about the potential for a major insurance deal that would shrink the field of large U.S. players from five to four.
Analysts have said for years that Anthem and No. 3 insurer Aetna Inc
The last major acquisition by Anthem was its purchase of government healthcare provider Amerigroup in 2012 for $4.5 billion. Aetna purchased Coventry, which also sells healthcare plans paid for by the U.S. government, in 2013 for about $5.6 billion.
Humana has a market capitalization of $26.5 billion and Cigna is worth $34.3 billion.
There is also a field of smaller Medicaid providers that are acquisition targets, according to analysts. These include Molina Healthcare Inc
Anthem recently closed on the purchase of Simply Healthcare, a Medicaid provider in Florida.
DeVeydt said the company was looking at expanding its Medicare business in Florida, Texas and California - three of the biggest healthcare markets.
"We would clearly love to have more scale in Medicare but our focus is first targeting the strategic markets that matter most," he said, referring to those three states. He said the company could increase its business in New York, Ohio and California without acquisitions.
(Reporting by Caroline Humer in New York; Editing by Matthew Lewis)
