Insurance Stocks Rise on GOP Prospects
NEW YORK (
) --
Wellpoint
(WLP)
stock has added 3% at $68.60 after the largest U.S. health insurer by membership revealed plans to begin offering health insurance products to the most populated country in the world.
An unnamed Wellpoint executive said in reports that the company is changing its strategy in China from researcher and consultant to provider of health insurance products through the establishment of a joint venture.
Wellpoint plans on providing affordable health insurance to the Chinese mass market with a "differentiated viewpoint."
The Wellpoint executive said that Wellpoint's products won't be available to the country's mass market before the middle of 2011, pending Chinese regulatory approval.
For Wellpoint, the story comes on the heels of previous predictions of lower operating income in 2010. Wellpoint said that it has taken a conservative view on future earnings amid flu outbreaks and costly Cobra insurance plans for unemployed workers.
Foreign-funded insurers reaped original premium incomes of CNY 40.3 billion or about $5.9 billion during the first 11 months of 2009, accounting for about 4% of the nation's total premium incomes, and inching up about 0.1 percentage points year-on-year, according to the China Insurance Regulatory Commission.
Other health insurers have also advanced in early afternoon trading.
UnitedHealth
(UNH) - Get Report
has added 5.1% at $35.50, while
Aetna
(AET)
has gained 5.1% at $33.
Cigna
(CI) - Get Report
is up by 3.1% at $38.
Humana
(HUM) - Get Report
stock has risen by 6% to $51.40.
The climb in these healthcare stocks is being driven by the possibility that a Republican could win the Massachusetts senate seat formerly controlled by Senator Edward Kennedy; a Republican victory could seriously undermine the Obama Administration's push for a U.S. healthcare overhaul, which insurers fear could hurt their businesses.
Analysts say that the lead-up to the Republican victory is lending support to the stocks, but that they could take back previous gains if a victory is actually achieved.
-- Reported by Andrea Tse in New York
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