Southern Cross / Aetna Merger

AA Insurance is now comfortable with the Commerce Commission's decision on Southern Cross' purchase of Aetna

AA Insurance chief executive, Chris Curtin, says their concerns about the proposed purchase had always centred on the issue of dominance of the private health insurance market.

"The fact that the Commerce Commission rejected the first two applications and only approved the third after Southern Cross undertook to divest the whole Aetna health insurance portfolio shows that the commission shared our concerns", he said.

"While we are disappointed that Southern Cross does not yet have a purchaser for the Aetna health portfolio, there appears to be sufficient safeguards to ensure that Southern Cross will not be able to increase its domination of the market using the Aetna portfolio. This is the right decision for the public and the Health Insurance industry because it ensures a robust, competitive market in which the public has the ability to choose between a number of providers."

Mr Curtin said that initially AA Insurance had some concerns about whether there was a full understanding by the Commission of the complexities of the health insurance industry. Additionally, AA Insurance was concerned that the Commission's approval of an application by Southern Cross to purchase MedicAid (which is now Aetna) in 1993 may have been used as a precedent. "However, all three decisions issued by the Commission show that they have been able to accurately assess all of the industry issues. The public should take confidence in the fact that the Commerce Commission process has worked."

ENDS

For further information, please contact: Catherine Beard Principal, Comsar Communications, Tel (04) 389 0544, Mob (021) 633 212

Chris Curtin, Chief Executive, AA Insurance,Tel (09) 356 6502, Hm (09) 846 6697, Mob (021) 675 713

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