Hartford Business Journal

6 Hartford Business Journal • August 8, 2016 www.HartfordBusiness.com TOP STORY Aetna, Humana seek to mollify DOJ through $117M asset sale Hartford-based Aetna and Kentucky-based Humana last week said they are collaborating to overcome a recent roadblock to their proposed $37 billion merger. Less than two weeks after federal officials filed an antitrust lawsuit seek- ing to block Aetna's $37 billion acquisition of Humana, the two insurers said they are willing to sell off a portion of their respective Medicare Advantage assets for $117 million. Aetna and Humana said they had reached an agreement with Molina Healthcare Inc. — a publicly traded managed-care provider based in Cali- fornia — to sell Medicare Advantage plans covering approximately 290,000 customers in 21 states, particularly those in which the two companies have larger combined Medicare market share. Connecticut, where Humana doesn't have any Medicare Advantage busi- ness, isn't among the 21 states. The lack of overlap is a key reason the Connecticut Insurance Department signed off on the deal earlier this year. The proposed asset sale to Molina, announced simultaneously with Aet- na's second-quarter earnings, is an effort by the two insurers to assuage an- ticompetitive concerns expressed by the U.S. Department of Justice, which sued on July 21 to block the proposed deal. The DOJ simultaneously filed suit to block Anthem's proposed $54 billion acquisition of Cigna. HEALTH CARE Anthem: Rate increase needed to ensure exchange's viability The declining number of health insurers participating in the state's Obamacare exchange was front and center at a public hearing last week regarding the nearly 27 percent rate hike Anthem has requested for its individual plans in 2017. Following public comments from more than a dozen Connecticut residents — all concerned about the rising cost of health care — Anthem officials told Connecticut insurance regulators that its requested increase is actuarially sound and takes into account rising drug costs, increases in medical trend, the scheduled elimination of Obamacare's reinsurance program, and what Anthem has now determined were inadequate 2016 rates. BANKING & FINANCE KeyCorp seals $4.1B First Niagara deal Ohio financial services provider KeyCorp said it has closed its purchase of First Niagara Financial Group, parent of Buffalo-N.Y. First Niagara Bank, which has a significant branch presence in Connecticut. The deal, first announced nine months ago, brings KeyCorp approximately 300 First Niagara branches in Connecticut, Massachusetts, New York and Penn- sylvania, as well as $40 billion in total assets. KeyCorp is the parent of KeyBank. Ironwood Capital helps finance Greater Hartford M&A deal Avon's Ironwood Capital has helped finance Southington-based Air Temp Mechanical Services' acquisition of Newington's Solo Mechanical Maintenance Inc., the companies announced. Ironwood Capital provided funds to support the acquisition. Solo Mechanical installs and services commercial and industrial air conditioning, heating, re- frigeration and ventilation systems, as well as energy management equipment. Air Temp has 40 technicians and 40 office staff, said Alex Levental, managing director, Ironwood Capital. ECONOMY & LABOR GE's new Boston campus detailed A rehabilitation of two historic buildings and construction of a new 12-story building connected by a bridge and pedestrian walkway are part of GE's plans for its new headquarters in Boston, the company said last week. The campus will be built in two phases, with the preservation and rehabilitation phase due to begin in the fourth quarter of this year. Occupancy is projected for the first quarter of 2018. The second phase, which will begin in the first quarter of 2017, will result in occupancy in later 2018, according to the company's plans, which are available in a public filing with the Boston Redevelopment Authority. The 2.4-acre campus will ultimately host 800 GE employees, along with col- laborators from the innovation and learning communities, the company said. GE decided earlier this year to relocate its corporate headquarters from Fair- field to Boston. New MetroHartford report highlights region's challenges Stagnant job growth, low education levels and outmigration of college grads and other taxpayers are among the Hartford region's largest challenges, accord- ing to a new report from the MetroHartford Alliance. The 2016 edition of "Metro Hartford Progress Points" calls on government and private institutions to find ways to attract and keep Millennials, expand and improve transportation infrastructure, and create more career pathways, among other initiatives. "The need for systemic change implied by this report requires leadership and more regional coordination and integration," the report reads. Net job growth in the region has been flat, but smaller and locally-owned businesses have increased employment by 23 percent between 1995 and 2013, the report found. At the same time, larger companies and employers headquar- tered out of state have decreased employment by 10 percent during this same time period, the report finds. Meantime, school enrollment in this region has declined by 7 percent since 2001, accounting for 29,000 additional empty classroom seats, yet education expenditures have increased 25 percent, the report finds. Unusual winter weather wiped out the area's peach crop This should be the time to pick your own peaches at one of the area's orchards. But unusual winter weather threw off the fruit's development, leading to drastically reduced crops, farmers say. Agriculture Department spokesman Steven Jensen, who is the editor of the Connecticut Weekly Agricultural Report, said that at least 80 to 90 percent of the peach crop was affected by the weather this year. "There are very few places that are doing pick your own," he said, adding those are mostly by the shoreline, especially the lower Connecticut River Valley. Fluctuations continued with cold weather in early April that affected fruit trees that had already started to blossom as the result of a mild winter with above-average temperatures in March, according to AccuWeather.com. – Ruchi Vaishnav, Journal Inquirer GOVERNMENT, POLITICS & LAW Key Malloy staffers leaving in fall Three aides are leaving their jobs with the Malloy Administration as the gov- ernor approaches the midpoint of his second term. In a statement, Brian Durand said "planned changes" in senior staffing tak- ing place early this fall will result in the departures of Mark Bergman, deputy chief of staff; Paul Mounds, senior director of policy and government affairs; and Devon Puglia, communications director. Succeeding Mounds, who has been with the governor's office since 2011, is Chris Smith, who has been Mounds' deputy. Kelly Donnelly, who serves as chief of staff to state Education Commissioner Dianna Wentzell, will replace Puglia. There are no immediate plans to replace Bergman, Durand said. State comptroller reports decrease in deficit, recommends caution Connecticut's fiscal 2016 budget deficit stood at $279.4 million last week, an improvement of $36.4 million from a previous estimate, according to Comptrol- ler Kevin Lembo. Final unaudited fiscal 2016 numbers will be available on Sept. 30, when Lembo will begin reporting early fiscal 2017 projections, with a final audited report released before the end of the calendar year. One-time revenue from federal grants constituted the primary impetus for improvement, Lembo told Gov. Dannel P. Malloy in a letter, but he expressed concern over the continued volatility of income tax receipts. "Connecticut continues to recover at a slow pace," Lembo said. "Market volatil- ity, and lower than anticipated wage growth, have led to significant shortfalls in income tax receipts and negated progress made in other areas of the economy." BY THE NUMBERS 290,000 The number of Medicare Advantage customers Aetna and Humana are willing to divest in 21 states to appease antitrust regulators. 9 The number of Connecticut residents competing in the summer Olympics in Brazil. $247,423 The amount of money the city of Hartford wired to a Dunkin' Donuts Park architect for past invoices that fired developer Centerplan Cos. had not paid. 9.2M The total number of residential and business customers Connecticut- based Frontier Communication had as of June 30, following a major acquisition from Verizon in three states. TOP 5 MOST READ on HartfordBusiness.com ■ Work could resume soon on beleaguered ballpark ■ Aetna, Humana seek to mollify DOJ through $117M asset sale ■ W. Htfd. wealth advisers split from Wells Fargo ■ GE's new Boston campus detailed ■ Hartford Distributors union to return to work tonight STAY CONNECTED For breaking and daily Greater Hartford business news go to www.HartfordBusiness.com. 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