UNH Expands in the Middle East - Analyst Blog
March 15 2012 - 1:20PM
Zacks
UnitedHealthcare International, owned by U.S.
health insurer UnitedHealth Group, Inc.
(UNH), has announced an agreement with Dubai-based
Al Sagr National Insurance Co. to expand in the
Middle East.
Per the agreement, UnitedHealth will provide
health insurance and other allied services to employers who have
employees in Middle Eastern countries such as Saudi Arabia, the
United Arab Emirates, Jordan, Qatar, Oman, Lebanon, Bahrain and
Kuwait.
The U.S. insurer has not yet projected the amount
of revenue accretion from the agreement. We think the deal will
offer a decent addition to the revenues given a surging demand for
medical facilities and health care services as a result of
population growth in the Middle East. Moreover, demographic
changes, increase in income and access to modern facilities has led
to greater instances of lifestyle related diseases like diabetes,
heart diseases and obesity in the region. Increasing awareness has
automatically raised the demand for health care
services.
Many countries in the Middle East are focused on
providing the best-in-class health care services for both the local
as well as the expatriate population. A majority of them have in
fact made health insurance mandatory for expatriates.
On the other end of the spectrum, U.S. health
insurers have been forced to look for other revenue options.
Geographical diversification features prominently in their plan of
action as the Health Care Reform imposes a lot of restrictions on
the insurers. Apart from diversifying globally, UnitedHealth is
also expanding its health service business, branded as Optum, and
has made a number of acquisitions recently in this
regard.
Also, other U.S. health insurers, CIGNA
Corp. (CI) and Aetna Inc. (AET) have
recently ventured into international markets. Cigna is expanding
its expatriate business throughout Asia and Europe while Aetna is
eyeing markets in China, Southeast Asia and India. Both these
companies expect international business to fuel long-term
growth.
UnitedHealth currently retains a Zacks # 2 Rank,
which translates into a short-term ‘Buy’ rating. Considering
better-than-average fundamentals, we are also maintaining our
long-term “Outperform” recommendation on the shares.
AETNA INC-NEW (AET): Free Stock Analysis Report
CIGNA CORP (CI): Free Stock Analysis Report
UNITEDHEALTH GP (UNH): Free Stock Analysis Report
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