A California regulator is approving Aetna Inc.'s proposed acquisition of rival health insurer Humana Inc.
Shelley Rouillard, director of the California Department of Managed Health Care, announced her decision Monday.
As a condition of the approval, Aetna agreed to limit premium increases in the small group market and to allow greater state oversight of its rates. The company will also have to keep certain decision-making functions in California and must invest in various health initiatives.
The proposed $35-billion cash-and-stock deal would make Hartford, Conn.-based Aetna a sizable player in the rapidly growing Medicare Advantage business, which offers privately run versions of the federally funded healthcare program for the elderly and some people with disabilities.
The merger still requires approval by the U.S. Department of Justice.
Aetna shares rose 1% to close at $122.34 on Monday. Shares of Louisville, Ky.-based Humana climbed 1.5% to $189.90.
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1:57 p.m.: This article was updated with stocks' closing prices.