UnitedHealthcare has acquired PreferredOne, a health insurer based in Golden Valley, in a deal that promises to help the nation's largest insurer compete for business in its home state.
The transaction closed Monday morning, said Hayes Batson, the chief financial officer of Fairview Health Services, which took full ownership of PreferredOne in early 2016. Financial terms were not disclosed.
The acquisition was a strategic move for UnitedHealthcare, which in 2017 announced a push for a bigger piece of the Minnesota health insurance market. Historically, PreferredOne stood as the fifth largest of the non-profit carriers in the state.
A spokesman for Minnetonka-based UnitedHealth Group, which is Minnesota's largest company by revenue, declined comment.
In applying for regulatory approval, UnitedHealth Group's chief accounting officer Thomas Roos noted United's "limited commercial health plan presence" in Minnesota.
"An acquisition of [PreferredOne] provides expansion of relationships within the state and geographic expertise, as well as creates a much closer alignment with a key local partner, Fairview Health Services," Roos wrote.
PreferredOne is known for selling administrative services to employers that "self-fund" their own health plans and take on the financial risk. About 200,000 people are enrolled in such plans, said David Crosby, the PreferredOne chief executive, in an interview.
Crosby said that another 50,000 people are enrolled in "fully-insured" health plans from PreferredOne, where the insurer takes the risk for the medical costs incurred by employer groups and individuals.