Insurers Caught In Five Way Courtship Competition

The healthcare industry's insurance market is likely to get a little bit smaller. The five companies who've dominated the market are rumored to become just three as talks about mergers and acquisitions heat up.

UnitedHealth Group Inc. UNH, Anthem Inc ANTM, Aetna Inc AET, CIGNA Corporation CI and Humana Inc HUM have all been in the news recently, as they discuss possible combinations with investors watching their every move for clues about who will be left out in the cold.

A Game Of Thrones

On Tuesday, Deutsche Bank likened the ongoing talks to the popular TV series "Game Of Thrones," as each insurer puts its best foot forward in order to make the most lucrative deal. Each company has its own strengths — Humana's link to Medicare, Aeta's information technology and Cigna's international appeal, just to name a few.

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Possible Combinations

While it is uncertain which companies will merge, there has been a lot of speculation about Anthem and Cigna, who have been in talks for weeks. Humana is reportedly considering a sale, while UnitedHealth Group has been talking to Aetna about a merging.

Show Me The Money

With so many possible combinations, many investors are wondering which deals would put the most cash in their pockets. According to Deutsche Bank, the answer is a complicated one.

While a merger between Anthem and Humana would produce the largest return on invested capital over a period of three years, a deal between Anthem and Cigna would add to earnings per share gradually during that time period.

The bank said it sees Aetna and Cigna as the most strategic partnership, because of the overlap in their businesses and their potential to cut costs.