Insurance giant UnitedHealth expanding into Brazil

Insurance giant UnitedHealth Group Inc. said it has agreed to acquire Brazil’s largest healthcare company for $4.9 billion in cash, continuing a recent buying spree by U.S. insurers.

UnitedHealth, the largest U.S. health insurer with about 36 million customers, said it will acquire Amil Participacoes SA to capture more growth from Latin America. Amil has annual revenue of about $5 billion and in addition to providing health benefits it also runs 22 hospitals and nearly 50 clinics.

In Brazil, UnitedHealth sees a fast-growing economy where the private health market is still largely untapped. The company said only about 25% of the population has private insurance compared with nearly 80% in the U.S.

Brazil’s “growing economy, emerging middle class and progressive policies toward managed care make it a high potential growth market,” said Stephen Hemsley, chief executive at UnitedHealth.

Major health insurers have been on an acquisition binge lately as they face thinner profit margins in the private insurance market under the federal Affordable Care Act. Many of the deals have focused on expanding into the U.S. government health business of serving Medicare and Medicaid patients.

In July, WellPoint Inc. agreed to acquire Medicaid insurer Amerigroup Corp. for $4.9 billion. Then last month Aetna Inc. agreed to pay about $5.6 billion for Coventry Health Care Inc., which runs Medicare and Medicaid plans.

Shares of UnitedHealth were up 37 cents to $57.50 in Monday trading.

UnitedHealth said it plans to acquire 90% of the outstanding shares of Amil for about $4.9 billion. The company expects to complete the deal in two steps and wrap it up next year, subject to regulatory approvals.

Amil’s founder, Dr. Edson Bueno, will continue leading the company and he will join UnitedHealth’s board once the transaction closes.

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