Aetna to Move Headquarters Out of Connecticut -- 2nd Update

By Joseph De Avila and Keiko Morris Features Dow Jones Newswires

Aetna Inc. is negotiating with several states to move its corporate headquarters out of Connecticut, dealing a blow to a state that is struggling with a widening budget deficit, stagnant population growth and rising unemployment.

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The health insurer said Wednesday that in uprooting from Hartford -- its home since 1853 -- it aimed to broaden access to innovation and talent. The company has explored moving to Boston and New York, according to people familiar with the discussions.

"We all know that employers, especially large employers, are attracted to city centers," Connecticut Gov. Dannel Malloy said. "We know that now more than ever, we are in competition across all industries -- not just with Massachusetts or New York state, but more specifically with Boston and New York City."

To keep Aetna in Connecticut, Mr. Malloy said his administration offered to match any financial incentives other states put on the table. He also said he offered to improve transportation in the region, beef up workforce development and provide more assistance to the struggling city of Hartford.

Mr. Malloy said he believes the vast majority of Aetna's 6,000 Connecticut employees will remain in the state and the company could chose to continue to operate as a Connecticut regulated insurer. Aetna had 49,500 at the end of last year.

"We remain committed to our Connecticut-based employees and the Hartford campus, and hope to have a final resolution by early summer," an Aetna spokesman said.

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Aetna has been touring Manhattan office buildings looking for about 200,000 square feet of space, a person with knowledge of the matter said.

The potential departure is a loss for Connecticut, which is facing a $5.1 billion deficit over the next two fiscal years and which has struggled to rehabilitate its image as a business-friendly state following last year's departure of General Electric Co. GE has said its decision to move to Boston after four decades in Fairfield was fueled by proximity to Boston-area universities and their graduates.

The state is struggling economically. Its unemployment rate rose to 4.9% in April, up from 4.5% in January, as other states in the region have seen joblessness track to record lows. The state has also had a tough time attracting new residents. Its population of 3.58 million residents is about the same as it was seven years ago.

Aetna's exit would also be a major setback for the city of Hartford, a community of about 125,000 residents that is also struggling with a fiscal crisis. Earlier this month the city began soliciting attorneys in case it had to file for bankruptcy protection.

"Across the country, companies are locating in places where they can recruit top talent," Hartford Mayor Luke Bronin said in a statement. "We don't have to be New York or Boston to be competitive, but we have to recognize that strong, fiscally sound, culturally vibrant metropolitan areas are key to economic growth."

Mr. Bronin said Aetna's senior leadership indicated in multiple conversations that the company had decided some time ago to move out of Connecticut.

While Hartford has struggled financially, it remains the center of the state's insurance industry. The city is also home to Hartford Financial Services Group Inc. and Travelers Cos.

Aetna, Hartford Financial and Travelers -- Hartford's biggest employers -- said in March they would collectively give the city $10 million annually over the next five years to help it avoid bankruptcy.

Write to Joseph De Avila at joseph.deavila@wsj.com and Keiko Morris at Keiko.Morris@wsj.com

(END) Dow Jones Newswires

May 31, 2017 16:50 ET (20:50 GMT)