HIP Health Plan of New York agreed to acquire ConnectiCare, Farmington, Conn., in a deal that would create a multistate insurer with 1.2 million members and 3,000 employees.
The purchase price was not disclosed, but HIP said ConnectiCare's $90 million debt would be paid off, boosting ConnectiCare's balance sheet after a ratings downgrade last year.
Privately held ConnectiCare covers 270,000 people in Connecticut and Massachusetts. Not-for-profit HIP is the largest HMO in metropolitan New York. It is expected to try to convert to a publicly traded company under pending New York legislation that would clear the way for any insurer to convert to for-profit status.
Officials said that the combination of HIP and ConnectiCare would have a much stronger presence in the highly competitive Northeast region. The acquisition is expected to close later this year, pending approval by the Connecticut Insurance Department.
The department will schedule a public hearing on the matter.