Aetna Reaches Agreement With Department of Justice to Proceed With Prudential Healthcare Acquisition.

HARTFORD, Conn.--(BW HealthWire)--June 21, 1999--

Aetna (NYSE:AET) today announced that it has reached an agreement with the U.S. Department of Justice (DOJ) that will enable it to proceed with its proposed acquisition of Prudential HealthCare.

Under the terms of the agreement, Aetna has agreed to divest the commercial HMO businesses in Dallas/Ft. Worth and certain Houston counties that were part of Aetna's 1998 acquisition of NYLCare. Aetna expects to retain its other NYLCare business in Texas. The agreement requires no divestitures in other states. The company will begin the divestiture process immediately.

"Although we do not agree with the Justice Department's concerns about the effect of the acquisition, a divestiture was the most expeditious way to bring closure to the comprehensive DOJ review process," said Richard L. Huber, chairman and CEO of Aetna.

The agreement affects approximately 260,000 current NYLCare commercial HMO members in the Houston and 167,000 NYLCare commercial HMO members in the Dallas/Ft. Worth markets. Following the divestitures and the close of the Prudential HealthCare acquisition, Aetna U.S. Healthcare would remain the leader in the Texas market, with approximately 2.5 million health members statewide, including 1.0 million HMO members.

"This agreement paves the way for the completion of the acquisition of PruCare," Huber said. "With the NYLCare integration outside of Texas proceeding on track, we look forward to focusing our energies on the immediate tasks of closing and integrating Prudential HealthCare, so that we can work with physicians to deliver greater value to our customers.

"Our acquisition of PruCare should benefit consumers by giving both Aetna U.S. Healthcare and PruCare members a choice of even more physicians. Furthermore, the larger database of health information should improve our ability to help physicians provide our members the care they need. Giving our members access to affordable, high-quality health care remains our number one priority.

"The sale of the NYLCare commercial HMO business was the most efficient way to resolve the DOJ's concerns. Because the Prudential Texas entity has operations in 14 states, it would have required a lengthy process to carve out the Dallas/Ft. Worth and Houston areas. The NYLCare Houston and Dallas/Ft. Worth commercial HMO businesses are part of distinct legal entities within Texas, and discrete operating entities within the Aetna U.S. Healthcare systems platform. This should enable the divestiture process to proceed apace, with minimal disruption or inconvenience to Aetna U.S. Healthcare's members, customers and overall business. We also will work to minimize the impact that these actions will have on our employees in Texas," Huber said.

The transaction still is subject to approval by several states and is expected to close shortly after the beginning of the third quarter. Aetna continues to project that the Prudential HealthCare acquisition will be accretive to operating earnings for 1999. The divestiture of the NYLCare businesses is expected to be completed in 1999.

"Over the past few months, we have developed a comprehensive plan for the integration of Prudential HealthCare," said Michael J. Cardillo, president of Aetna U.S. Healthcare. "Our plans are designed to promote continuity and achieve our goal of making the integration as transparent as possible to our customers. We also look forward to extending the benefits of our industry-leading disease management and wellness programs, and the industry's largest medical claim data warehouse to Prudential HealthCare's members."

On December 10, 1998, Aetna announced that it would acquire Prudential HealthCare from the Prudential Insurance Company of America for approximately $1 billion. The acquisition would make Aetna the country's largest provider of health benefits, with more than 21 million members, and the nation's leading managed care company, with more than 18 million members, after the agreed-upon divestitures. The transaction also will more than double Aetna's dental membership from over 7 million members to approximately 16 million members.

Aetna is a leading provider of health and retirement benefit plans and financial services, with three core businesses: Aetna U.S. Healthcare, Aetna Retirement Services and Aetna International. The company provides nearly 35 million people worldwide with quality products, services and information that help them manage best what matters most: their health and financial well-being.

CAUTIONARY STATEMENT - Certain information in this press release is forward looking including, but not limitedbusiness. That information is based on managemenl future results and other future events to difnsaction on a timely basis and in a cost-efficicy of certain contractual protections and the ability to eliminate duplicative administrative functions and unanticipated increases in medical costs, inclfollowing the acquisition; Year 2000 issues; the effect of interest rate changes on financing costs; and litigation. For further discussion of important risk factors that may materially affect Aetna's results and the forward-looking statements herein, please see the risk factors contained in Aetna's Securities and Exchange Commission filings, which risk factors are incorporated herein by reference. You also should read those filings, particularly Aetna's 1998 Report on Form 10-K and Report on Form 10-Q for the quarter ended March 31, 1999, for a discussion of Aetna's results of operations and financial condition.