The New York Department of Financial Services conditionallyapproved Aetna Inc.'sproposed acquisitionof Humana Inc.,Bloomberg News reported, citing "people familiar with the matter."

The New York regulator imposed several conditions to ensureAetna and Humana continue to offer private Medicare options in the state and notcut benefits. The state found that a combination of the companies will not hurtcompetition in the state's health insurance market.

The approval is still subject to a sign-off from the federalgovernment.

The planned transaction also awaits an approval frominsurance regulators in Georgia, where a public hearing on the transaction willtake place July 26.

Aetna recently met with U.S. Department of Justice antitrust officials anddiscussed a plan to sellits Medicare Advantage portfolio in a bid to obtain approval for the deal. Thedepartment is reportedly concernedthat the potential tie-up between the companies couldhurt competition within the industry.