NEW YORK ? Consolidation among US health insurers will heat up next year as companies have largely finished integrating past acquisitions and new deals can help cut costs and generate members, according to an industry analyst.

CIBC analyst Carl McDonald said in research note that insurers will turn to deals as they face challenges to grow enrolment and less-favourable healthcare-cost trends.

McDonald's analysis of deals since 2003 shows that shares of insurers involved in major acquisitions were up 40 percent in the year following a deal's announcement compared to a rise of about 31 percent for the group.

"We think 2007 will be another year of significant M&A in the managed care industry," said McDonald.

Insurers such as UnitedHealth Group Inc. and WellPoint Inc. announced major acquisitions in 2005, but this year has been quieter.

Heading into 2007, McDonald points to four insurers of varying sizes as alluring acquisition targets: Cigna Corp. , Coventry Health Care Inc. , Health Net Inc. and Universal American Financial Corp.

Meanwhile, he sees Humana Inc. as a possible acquirer.

Humana is heavily focused on administering health plans under Medicare, the government health program for the elderly, and acquisitions or mergers can help it diversify by boosting enrolment in commercial plans that offer insurance through employers. McDonald views Coventry and Cigna as logical fits for Humana.

Health Net, meanwhile, is an attractive candidate in part because it offers a rare chance for insurers to increase their positions in California, the largest health insurance market in the United States, McDonald said.