Tuesday, Oct. 19, 2004 | 11:08 a.m.
STAFF AND WIRE REPORTS
Shares of UnitedHealth Group Inc., Humana Inc., Anthem Inc. and other health insurers that operate in Nevada and nationally tumbled after the New York Post reported that New York Attorney General Eliot Spitzer was widening a probe of insurance brokers' fees.
The probe would extend an investigation into possible conflicts of interest over fees collected by brokers for insurance policies sold to individuals, corporations and local government, the Post said.
"It is hazardous to touch these stocks right now," said Thomas Wille, who oversees the equivalent of $200 million in U.S. stocks at Verwaltungs-und Privat-Bank AG in Zurich. "Basically the motto is: 'If Spitzer is around, sell.' Who needs the aggravation?"
Insurers including Aetna Inc., Cigna Corp. and MetLife Inc. already received subpoenas from Spitzer in June. Those requests came as part of a probe into whether brokers who make money by helping companies choose policies are compromising client relationships by accepting payments from insurers.
Shares of UnitedHealth, the biggest U.S. health insurer and a Nevada insurer, fell 9.2 percent, to $66.60 at 12:30 p.m. in New York Stock Exchange composite trading, while PacifiCare Health Systems Inc. fell 10.4 percent to $32.65. Shares of Anthem slid nearly 9 percent, to $73.73, while Cigna's shares fell 11.7 percent to $58.77 and Aetna's shares fell 14.2 percent to $83.85. All of those insurers sell policies in Nevada.
UnitedHealth spokesman Mark Lindsay, Aetna spokesman Fred Laberge, Cigna spokesman Wendell Potter and WellPoint spokesman Dan Whelan didn't immediately return calls seeking comment.
Shares of Las Vegas-based Sierra Health Services Inc. fell nearly 15 percent to $42.23 in mid-day trading.
Sierra spokesman Peter O'Neill said Sierra's share price dropped after the news broke even though the company does not do business in New York.
"The managed-care industry is being painted with a very broad brush by Wall Street today," he said.
Although Sierra does not operate in New York, O'Neill stressed that the company does not "engage in the type of activity that the New York attorney general is looking at with those other companies."
Sierra pays commissions to its brokers when its company plans are sold and its top-selling brokers receive a less than 1 percent bonus commission, O'Neill said.
Calls seeking comment made to Spitzer's office weren't immediately returned.09
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