Analysts at a major rating agency say a big health carrier’s move to acquire a consumer-driven health pioneer fits with the carrier’s strategy.[@@]

The agency, Standard & Poor’s Ratings Services, New York, says a proposal by UnitedHealth Group Inc., Minnetonka, Minn., to acquire Definity Health Corp., Minneapolis, for $300 million in cash will have no effect on UnitedHealth’s ratings.

UnitedHealth hopes to complete its proposed acquisition of the privately held company by Dec. 31.

UnitedHealth says it is making the Definity deal to expand the consumer-driven health division at its Uniprise unit. Many of the health plans that the division runs incorporate health reimbursement arrangements, health savings accounts and other personal health accounts. The Uniprise division will have 850,000 members in account-based plans in January 2005, UnitedHealth says.

Definity expects to generate about $100 million in revenue in 2005 by providing account-based plans with 500,000 members for about 100 large, self-insured employers. Definity is accepting the UnitedHealth offer to get access to UnitedHealth’s financial support, provider network and health account management systems, according to Definity Chief Executive Tony Miller.

“Standard & Poor’s believes that the acquisition is modest in size and is consistent with [UnitedHealth's] acquisition strategy to enhance selected product and service capabilities,” S&P says in a comment on the deal.

The transaction will result in a modest increase in UnitedHealth’s intangible assets, but, because UnitedHealth has pursued share repurchases rather than retaining its earnings, the anticipated intangibles-to-equity ratio is consistent with UnitedHealth’s intangibles-to-equity ratio in the past few years, S&P says.

“The extremely strong earnings and cash flows from operations currently support that level of goodwill,” S&P says.

But the goodwill level is a factor in Standard & Poor’s assessment of the quality of UnitedHealth’s capital,” S&P says.