It has been announced by Health insurer Aetna Inc that it is going to buy its smaller competitor Humana Inc. the company will be spending approximately $37 billion in cash and stock. According to reports, the deal is the largest ever in the insurance industry. It is expected that the agreement will also increase Aetna's Medicare Advantage business to triple.

Antitrust scrutiny will also be done on the deal, but if it manages to pass, the earlier largest insurance deal that was announced this week will not have a considerable significance. In the earlier deal, Swiss property and casualty company ACE Ltd said that it was acquiring Chubb Corp for $28 billion. Anthem Inc's acquisition of WellPoint for $16.6 billion that was made in 2004 will also be looked upon similarly.

According to Mark Bertolini, Aetna's chairman and CEO, "This combination will allow us to continue to invest in excellent service for our members and strengthen our partnerships with providers to deliver high quality care at an affordable price".

According to analysts, M&A activity in the healthcare sector was looking forward to the conclusion of Obamacare ruling last week, in which key subsidies that highlight the reform were supported, providing more confidence to healthcare insurers.

If an insurer is at a bigger position, it has more authority to negotiate prices. Anthem has put forward a deal to acquire Cigna Corp in order to come up with the largest insurer in the country, bringing down UnitedHealth Group Inc. According to reports, UnitedHealth could be observing Cigna and Aetna.