Aetna Reports Second Quarter 2000 Earnings.Business Editors HARTFORD Hartford, city (1990 pop. 139,739), state capital, Hartford co., central Conn., on the west bank of the Connecticut River; settled as Newtown 1635–36 on the site of a Dutch trading post (1633; abandoned 1654), inc. 1784. , Conn--(BUSINESS WIRE)--Aug. 4, 2000 Aetna (NYSE NYSE See: New York Stock Exchange : AET AET Aetna, Inc. AET After Extra Time AET Actual Evapotranspiration AET Alliance for Environmental Technology AET Alpha-Ethyltryptamine AET Applied Extrusion Technologies, Inc. ) announced today second quarter 2000 operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before , excluding other items,(1) of $134.0 million, or $0.94 per common share, compared with $160.9 million, or $1.03 per common share, for the second quarter of 1999.(2) "These results, while disappointing, are in line with our announcement on July 18," said Aetna Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. William H. Donaldson. "With the announcement of our agreement to sell our financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. and international businesses to ING Group ING Groep N.V. (NYSE: ING, Euronext: INGA) (known as ING Group) is a financial institution of Dutch origin offering banking, insurance and asset management services. ING once stood for Internationale Nederlanden Groep. , we have taken an important step toward our stated goal of delivering value to our shareholders. We now can focus our full attention on improving our financial performance and redefining the health care business model to better serve our constituents. "We believe our health care business has the potential to achieve greater efficiency and improved margins. To achieve this goal, we have begun to implement the action steps we outlined on July 18. We already have increased our pricing for business renewing in the fourth quarter and beyond to reflect higher medical costs. We also have provided increased flexibility to regional management to address local medical cost issues and directed more resources toward on-site utilization reviews u·til·i·za·tion review n. A process for monitoring the use, delivery, and cost-effectiveness of services, especially those provided by medical professionals. that take place concurrent with care delivery. And we are currently evaluating the markets for each of our commercial products, and intend to either improve or selectively exit those that do not meet our profitability or strategic targets. "Despite the higher-than-anticipated medical cost increases for the second quarter, our health care business remains profitable, with strong cash flow, and we continue to achieve competitive medical loss ratios in many of our core markets. "At the same time, we also recognize that we must remake re·make tr.v. re·made , re·mak·ing, re·makes To make again or anew. n. 1. The act of remaking. 2. Something in remade form, especially a new version of an earlier movie or song. our model to better serve employers and consumers, and improve relationships with physicians and hospitals. We are in the process of restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). our product portfolio to introduce new products for January 2001 that fulfill ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. consumers' increasing desire to make informed choices and direct their own care. We also are re-engineering our processes with the goal of removing administrative burdens, increasing efficiency and improving customer service. "The intent is to eliminate those policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental that may have no positive effect in terms of either monitoring quality or managing costs -- the so-called `hassle factor hassle factor Managed care Any time-consuming and/or paperwork-ridden maneuver required of physicians, pharmacologists and other health care professionals before a 3rd .' We are in this business for the long term and to succeed, we must have constructive, mutually beneficial Adj. 1. mutually beneficial - mutually dependent interdependent, mutualist dependent - relying on or requiring a person or thing for support, supply, or what is needed; "dependent children"; "dependent on moisture" physician and hospital relationships, even as we manage costs on behalf of our customers and strive for greater efficiency. "We believe that improved provider relationships can indeed coexist co·ex·ist intr.v. co·ex·ist·ed, co·ex·ist·ing, co·ex·ists 1. To exist together, at the same time, or in the same place. 2. with improved financial performance, and that achieving both in tandem Adv. 1. in tandem - one behind the other; "ride tandem on a bicycle built for two"; "riding horses down the path in tandem" tandem should result in increased value to our shareholders long term," Donaldson said. Aetna U.S. Healthcare U.S. Healthcare is a now-defunct healthcare company. The logo had an apple. The merger with Aetna In 1996, the company merged with Aetna, calling it Aetna U.S. Healthcare. The U.S. Healthcare apple logo was next to the Aetna name, and U.S. Healthcare under it. U.S. Operating Earnings Decline Due to Higher Medical Costs Aetna U.S. Healthcare, which provides a full spectrum of managed health care, indemnity Recompense for loss, damage, or injuries; restitution or reimbursement. An indemnity contract arises when one individual takes on the obligation to pay for any loss or damage that has been or might be incurred by another individual. and group insurance products, reported operating earnings, excluding other items, of $74.0 million, compared with $104.1 million for the second quarter of 1999. The decline in operating earnings primarily reflects significantly higher medical costs in both the Commercial and Medicare Medicare, national health insurance program in the United States for persons aged 65 and over and the disabled. It was established in 1965 with passage of the Social Security Amendments and is now run by the Centers for Medicare and Medicaid Services. HMO HMO health maintenance organization. HMO n. A corporation that is financed by insurance premiums and has member physicians and professional staff who provide curative and preventive medicine within certain financial, products, partially offset by the inclusion of the Prudential Prudential is the name of two different companies and buildings named after them: Companies:
The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs primarily related to the Prudential HealthCare business. During the quarter, increases in Aetna U.S. Healthcare's commercial HMO medical costs (or the medical cost trend) rose approximately 10 percent over the second quarter of 1999, primarily due to higher-than-anticipated utilization. This figure excludes Prudential HealthCare. While specific factors vary in importance by region and local market, major drivers include: -- a significant rise in inpatient inpatient /in·pa·tient/ (in´pa-shent) a patient who comes to a hospital or other health care facility for diagnosis or treatment that requires an overnight stay. in·pa·tient n. utilization; -- a higher number of emergency room visits and outpatient surgery Outpatient Surgery, also referred to as ambulatory surgery or same-day surgery, is surgery that does not require an overnight hospital stay. The term “outpatient” arises from the fact that surgery patients may go home do not need an overnight hospital procedures; and -- to a lesser extent, longer maternity MATERNITY. The state or condition of a mother. 2. It is either legitimate or natural. The former is the condition of the mother who has given birth to legitimate children, while the latter is the condition of her who has given birth to illegitimate children. length of stays, more specialist office visits and increased costs for physician-administered injectables. As a result of higher-than-anticipated medical costs, Aetna U.S. Healthcare's commercial HMO medical costs as a percent of revenues (medical loss ratio, or MLR MLR mixed lymphocyte reaction. MLR Myocardial laser revascularization, see there ) rose to 85.9 percent in the second quarter of 2000. Including Prudential HealthCare, the commercial HMO medical loss ratio was 86.8 percent. In the PHC commercial HMO business, higher-than-anticipated medical costs resulted in an MLR of 88.9 percent. The Medicare HMO business continued to deteriorate de·te·ri·o·rate v. 1. To grow worse in function or condition. 2. To weaken or disintegrate. , and the overall Medicare HMO medical loss ratio rose to 97.3 percent in the second quarter of 2000. On June 29, the company announced its intent to exit those Medicare HMO markets where plan operations are no longer feasible under current federal reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. levels and market conditions. Unless legislative changes are made prior to the end of the year to increase payments under Medicare contracts to an acceptable level, these withdrawals would take effect on January 1, 2001 and would affect approximately 340,000 current Medicare HMO members. Until then, the company will focus on mitigating mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. the effects of higher Medicare medical costs by: ending new Medicare member enrollment in certain markets; curtailing marketing and advertising in select markets to minimal levels; continuing to identify high-risk high-risk adjective Referring to an ↑ risk of suffering from a particular condition Infectious disease Referring to an ↑ risk for exposure to blood-borne pathogens, which occurs with blood bank technicians, dental professionals, dialysis unit members and provide proactive case management; and continuing to monitor inpatient utilization through our special Medicare unit. Total Health membership stood at 19.4 million as of June 30, 2000. Total HMO membership declined from Dec. 31, 1999 due to continued attrition Attrition The reduction in staff and employees in a company through normal means, such as retirement and resignation. This is natural in any business and industry. Notes: in Prudential HealthCare membership, partially offset by growth in the Aetna U.S. Healthcare risk and nonrisk HMO business. HMO SG&A expenses, excluding severance costs and the New Jersey assessment, were 11.4 percent of revenues, lower than the 11.6 percent ratio for the first quarter 2000 and about even with the prior-year period, as ongoing expense initiatives and Prudential HealthCare synergies partially offset higher salary costs. Large Case Pensions, which manages a variety of discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: and other retirement and savings products for defined benefit and defined contribution plan Defined contribution plan A pension plan whose sponsor is responsible only for making specified contributions into the plan on behalf of qualifying participants. Related: Defined benefit plan customers, reported $14.4 million in operating earnings, excluding the other item, for the second quarter 2000, a decrease from the prior year and in keeping with the run-off nature of its product line. Additionally, as a result of a comprehensive reserve analysis, the company recorded a $94.9 million after-tax benefit from a reduction in reserves for discontinued products in the quarter. A similar $50.2 million after-tax benefit was recorded in the second quarter of 1999. Financial Services and International Show Gains Aetna Financial Services (AFS A distributed file system for large, widely dispersed Unix and Windows networks from Transarc Corporation, now part of IBM. It is noted for its ease of administration and expandability and stems from Carnegie-Mellon's Andrew File System. AFS - Andrew File System ), which markets a wide array of retirement and investment products to small businesses, educational institutions, state and local governments, nonprofit organizations Nonprofit Organization An association that is given tax-free status. Donations to a non-profit organization are often tax deductible as well. Notes: Examples of non-profit organizations are charities, hospitals and schools. and individuals, reported second quarter 2000 operating earnings of $63.3 million, 24 percent higher than the $50.9 million reported for the second quarter of 1999. Assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. and administration grew by 29 percent to $80.5 billion as of June 30, 2000. Strong performance in the equity markets in 1999 and the first quarter of 2000, as well as new sales and deposits, helped drive asset growth over the prior year. Despite the market decline during the second quarter of 2000, AFS assets under management and administration grew by $3 billion from the first quarter, reflecting primarily new administrative sales. Aetna International, which sells life insurance, health and pension products in targeted emerging markets, reported second quarter 2000 operating earnings of $52.7 million, compared with $45.4 million in the second quarter of 1999. The increase in earnings was primarily due to premium growth in Taiwan, improvement in the Brazil health and strength in the Mexico annuity annuity: see insurance. annuity Payment made at a fixed interval. A common example is the payment received by retirees from their pension plan. There are two main classes of annuities: annuities certain and contingent annuities. businesses, and the inclusion of results from the Aetna Heiwa Life Insurance Company in Japan, partially offset by lower earnings in Malaysia. On July 20, 2000, Aetna announced a definitive agreement to sell Aetna Financial Services and Aetna International to ING Group. The transaction is targeted to close by the end of the year, and is subject to shareholder, regulatory and other approvals and other closing conditions. Total Aetna Revenues, including net realized capital gains or losses capital gains or losses n. particularly when calculating the tax liability of an individual or business, this is the difference between the original cost plus the cost of capital improvements, excluding maintenance, called "basis" and the sales price. for the second quarter of 2000, grew by 37 percent to $8.1 billion, primarily due to the Prudential HealthCare acquisition. Second quarter 1999 total revenues were $5.9 billion. Net Income for the second quarter 2000 was $186.4 million, or $1.30 per share, compared with $217.5 million, or $1.43 per share, for the second quarter of 1999. Included in net income is a $14.6 million after-tax charge for the company's estimated share of the industry assessment related to the New Jersey Insolvent INSOLVENT. This word has several meanings. It signifies a person whose estate is not sufficient to pay his debts. Civ. Code of Louisiana, art. 1980.. A person is also said to be insolvent, who is under a present inability to answer, in the ordinary course of business, the responsibility HMO Assistance Fund Act of 2000. Second quarter 2000 net income also includes the previously mentioned $94.9 million reserve benefit, as well as a net realized capital loss of $27.9 million after tax primarily due to capital losses recorded in the international segment. This compares to a $50.2 million reserve benefit and a $6.4 million after-tax net realized capital gain in the second quarter of 1999. A Fortune 50 company, Aetna currently provides over 45 million people worldwide with quality products, services and information. Aetna is the nation's leading health and related benefits organization with 19.4 million health members, 14.6 million dental members, and 11.5 million group insurance members. Information about Aetna is available at www.aetna.com. The public can access Aetna's first quarter 2000 conference call today at 9 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy by dialing 212-896-6074. CAUTIONARY STATEMENT - Certain information in this press release is forward looking, including statements regarding the future business prospects of our health business, the evaluation of our commercial health markets, the restructuring of our health product portfolio, our expectations as to the effect on our business and share price of improving our relationships with providers, our expectations as to the future impact of certain other actions and plans we are implementing in our health business, our expectations relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc exiting certain Medicare markets effective 2001, and our target closing date for the previously announced transaction with ING Group. Forward-looking information is based on management's estimates, assumptions and projections, and is subject to significant uncertainties, many of which are beyond Aetna's control. Important risk factors could cause the actual future results of Aetna's businesses and other future events to differ materially from those currently estimated by management. Risk factors that could materially affect statements made concerning the results of our health business include, but are not limited to: continued or further unanticipated increases in medical costs (including increased medical utilization, increased pharmacy pharmacy, art of compounding and dispensing drugs and medication. The term is also applied to an establishment used for such purposes. Until modern times medication was prepared and dispensed by the physician himself. In the 18th cent. costs, increases resulting from unfavorable changes in contracting or recontracting with providers, changes in membership mix to lower premium or higher cost products or membership adverse selection); the availability of appropriately qualified personnel to implement our new utilization review policies; the ability to successfully integrate the Prudential HealthCare transaction on a timely basis and in a cost-efficient manner, and to achieve projected operating earnings targets for that acquisition (which also is affected by the adequacy of certain contractual economic projections in the acquisition, the ability to retain acquired membership and the ability to eliminate duplicative du·pli·cate adj. 1. Identically copied from an original. 2. Existing or growing in two corresponding parts; double. 3. administrative functions and integrate management information systems); adverse government regulation (including legislative proposals to eliminate or reduce ERISA See Employee Retirement Income Security Act. ERISA See Employee Retirement Income Security Act (ERISA). pre-emption PRE-EMPTION, intern. law. The right of preemption is the right of a nation to detain the merchandise of strangers passing through her territories or seas, in order to afford to her subjects the preference of purchase. 1 Chit. Com. Law, 103; 1 Bl. Com. 287. 2. of state laws that would increase potential litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. exposure, other proposals that would increase potential litigation exposure or proposals that would mandate coverage of certain health benefits); adverse pricing actions by government payors; changes in size and product mix of membership in key health markets; and the outcome of litigation and other regulatory matters, including numerous purported pur·port·ed adj. Assumed to be such; supposed: the purported author of the story. pur·port  ed·ly adv. health care class actions and ongoing reviews of business
practices by various regulatory agencies regulatory agencyIndependent government commission charged by the legislature with setting and enforcing standards for specific industries in the private sector. The concept was invented by the U.S. . Risk factors that could materially affect statements made concerning the ING transaction include, but are not limited to: the timely receipt of necessary shareholder, regulatory and other consents and approvals needed to complete the transaction, which could be delayed for a variety of reasons related or not related to the transaction itself; the fulfillment ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. of all of the closing conditions specified in the transaction documents; and the results of, and credit ratings assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. to, Aetna's health business at and prior to the closing of the ING transaction. For further discussion of important risk factors that may materially affect the results of Aetna's health business prior to the closing of the ING transaction and other management estimates, 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 1999 Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and Report on Form 10-Q Form 10-Q See 10-Q. for the period ended March 31, 2000 filed with the SEC and Report on Form 10-Q for the period ended June 30, 2000 to be filed with the SEC, for a discussion of Aetna's results of operations and financial condition. (1) Other items in 2Q 2000 include a $14.6 million after-tax charge related to the New Jersey Insolvent HMO Assistance Fund Act of 2000. Also included in both the current and prior-year quarter is a benefit from the reduction in discontinued products reserves in the Large Case Pensions segment: $94.9 million after tax in 2Q 2000 and $50.2 million after tax in 2Q 1999. Operating earnings for the second quarter of 1999 include $31.7 million after tax in Year 2000 costs. Operating earnings also exclude net realized capital gains or losses. Per share amounts are reflected on a diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis. (2) Results for the second quarter of 1999 and other comparisons reflect the restatements announced on Feb. 1, 2000.
Consolidated Statements of Income
(Millions, except share and per common share data)
3 Months Ended June 30, 6 Months Ended June 30,
2000 1999 2000 1999
Revenue:
Premiums $ 6,759.1 $ 4,641.8 $ 13,153.0 $ 9,023.2
Net investment
income 737.7 734.6 1,524.4 1,484.0
Fees and other
income (1) 700.3 559.3 1,413.1 1,103.8
Net realized
capital gains
(losses) (50.5) 9.8 (53.6) 26.9
Total
revenue 8,146.6 5,945.5 16,036.9 11,637.9
Benefits and
expenses:
Current and
future
benefits (2) 6,277.5 4,359.1 12,160.5 8,500.4
Operating
expenses 1,468.1 1,085.5 2,922.1 2,129.3
Interest
expense 68.0 64.1 150.7 128.7
Amortization
of goodwill
and other
acquired
intangible
assets 117.8 105.7 233.9 213.4
Amortization
of deferred
policy
acquisition
costs 58.3 51.7 117.1 101.7
Reduction of
reserve for
loss on
discontinued
products (146.0) (77.2) (146.0) (77.2)
Total
benefits
and expenses 7,843.7 5,588.9 15,438.3 10,996.3
Net income
before income
taxes 302.9 356.6 598.6 641.6
Income taxes 116.5 139.1 242.8 254.5
Net income 186.4 217.5 355.8 387.1
Less:
preferred
stock
dividends (3) -- 13.8 -- 27.6
Net income
applicable to
common
ownership $ 186.4 $ 203.7 $ 355.8 $ 359.5
Shareholders'
equity $ 11,084.2 $ 11,256.6
(1) Includes $36.2 million and $84.0 million, for the three and six
months ended June 30, 2000, respectively, of supplemental fees for
servicing The Prudential Insurance Company of America's (Prudential)
Administrative Services Only (ASO) business, including amortization of
amounts established as part of the Prudential Healthcare (PHC)
purchase accounting.
(2) Reflects $34.9 million and $47.2 million, for the three and six
months ended June 30, 2000, respectively, relating to recoveries under
a reinsurance agreement with Prudential; recognition of a portion of
the reinsurance premium paid, and the net amortization of amounts
established as part of the PHC purchase accounting.
(3) Preferred stock dividends are reflected for 1999 only. On July 19,
1999, the Company redeemed all of its Class C preferred stock and
issued approximately 9.5 million shares of common stock in connection
with the redemption. At June 30, 1999, 11.6 million of Class C
preferred shares were outstanding.
Consolidated Statements of Income (Continued)
3 Months Ended June 30, 6 Months Ended June 30,
2000 1999 2000 1999
Results per
common share:
Operating earnings
excluding other
items- (1)(2)
Basic $ .95 $ 1.04 $ 2.25 $ 2.07
Assuming
dilution $ .94 $ 1.03 $ 2.23 $ 2.05
Operating earnings
including other
items-assuming
dilution (1)(2) $ 1.50 $ 1.39 $ 2.79 $ 2.40
Net Income -
Basic $ 1.32 $ 1.45 $ 2.52 $ 2.55
Assuming
dilution $ 1.30 $ 1.43 $ 2.49 $ 2.53
Common
shareholders'
equity $ 78.53 $ 73.74
Common stock
dividends $ .20 $ .20 $ .40 $ .40
Weighted average
common shares -
basic (3) 140,985,582 140,910,901 141,128,421 141,140,347
Weighted average
common shares -
diluted (3) 143,242,791 142,212,379 142,672,630 142,318,019
(1) Operating earnings for the three and six months ended June 30,
2000 include PHC earnings.
(2) Other items include: for the three and six months ended June 30,
1999 and 2000, an after-tax benefit from a reduction of the reserve
for anticipated future losses on discontinued products in the Large
Case Pensions segment; and for the three and six months ended June 30,
2000, an assessment related to the New Jersey HMO Insolvency Fund in
the Aetna U.S. Healthcare segment.
(3) Weighted average common shares and common share equivalents
include the effect of dilutive stock options and stock-based awards
and the effect of potentially dilutive conversions of preferred stock
(1999 only), where appropriate. Actual common shares outstanding at
June 30, 2000 and 1999 were 141.1 million and 141.0 million,
respectively. On July 19, 1999, Aetna redeemed all of its Class C
Preferred Stock and issued approximately 9.5 million shares of Common
Stock.
Additional information about the Company's results is published in the
2000 Second Quarter Financial Supplement available from Robyn S.
Walsh, Investor Relations, (860) 273-6184, in the Company's 2000
Second Quarter Form 10-Q to be filed with the Securities and Exchange
Commission, or is available from our Web site, http://www.aetna.com.
Segment Information(1)(2)
(Millions)
3 Months Ended June 30, 6 Months Ended June 30,
2000 1999 2000 1999
Aetna U.S.
Healthcare:
Revenue $ 6,450.4 $ 4,473.7 $ 12,928.5 $ 8,910.1
Operating earnings
excluding other
item $ 74.0 $ 104.1 $ 205.8 $ 210.3
Assessment -
New Jersey HMO
Insolvency Fund (14.6) -- (14.6) --
Operating earnings
including other
item $ 59.4 $ 104.1 $ 191.2 $ 210.3
Aetna Financial
Services:
Revenue $ 425.3 $ 376.8 $ 855.4 $ 747.5
Operating earnings $ 63.3 $ 50.9 $ 123.3 $ 98.2
Aetna
International:
Revenue $ 1,059.7 $ 787.3 $ 1,751.2 $ 1,357.5
Operating earnings $ 52.7 $ 45.4 $ 101.6 $ 88.4
Large Case
Pensions:
Revenue $ 259.1 $ 296.5 $ 550.9 $ 591.2
Operating earnings
excluding other
item $ 14.4 $ 21.6 $ 31.0 $ 43.9
Reduction of
reserve for loss
on discontinued
products 94.9 50.2 94.9 50.2
Operating earnings
including other
item $ 109.3 $ 71.8 $ 125.9 $ 94.1
Corporate:
Interest $ (46.8) $ (40.1) $ (96.8) $ (80.7)
Other (23.6) (21.0) (46.9) (41.4)
Reinvestment of
Life sale
proceeds -- -- -- .6
Net operating
expenses $ (70.4) $ (61.1) $ (143.7) $ (121.5)
Total Company:
Operating earnings $ 134.0 $ 160.9 $ 318.0 $ 319.3
Reduction of
reserve for loss
on discontinued
products 94.9 50.2 94.9 50.2
Assessment - New
Jersey HMO
Insolvency Fund (14.6) -- (14.6) --
Net realized
capital gains
(losses) (27.9) 6.4 (42.5) 17.6
Net income $ 186.4 $ 217.5 $ 355.8 $ 387.1
(1) All amounts, except revenue, are presented net of taxes. Revenue
and operating earnings exclude net realized capital gains or losses.
(2) Operating earnings for the three and six months ended June 30,
2000 include PHC earnings in the Aetna U.S. Healthcare segment and
interest expense related to funding the transaction in the Corporate
segment.
Aetna U.S. Healthcare Enrollment and Other Statistics
(Thousands)
% Change From:
June 30, December 31, June 30, December 31, June 30,
2000 1999(1) 1999 1999 1999
Membership by
Product:
HMO - Risk
Commercial 7,865 8,219 5,434 (4.3) 44.7
Medicare 648 703 566 (7.8) 14.5
Medicaid 142 172 141 (17.4) 0.7
HMO - Nonrisk 932 746 755 24.9 23.4
Total HMO 9,587 9,840 6,896 (2.6) 39.0
POS 3,787 3,925 2,663 (3.5) 42.2
PPO 3,838 3,970 3,829 (3.3) 0.2
Total Managed
Care Membership 17,212 17,735 13,388 (2.9) 28.6
Indemnity 2,214 2,755 2,220 (19.6) (0.3)
Total Health
Membership 19,426 20,490 15,608 (5.2) 24.5
Total Group
Insurance 11,508 11,781 12,361 (2.3) (6.9)
Dental
Membership 14,628 15,750 7,861 (7.1) 86.1
Three Months Ended Six Months Ended
June 30, December 31, June 30, June 30, June 30,
2000 1999 1999 2000 1999
AUSHC
Commercial HMO
Medical Loss
Ratio 86.8% 84.8% 82.5% 85.3% 82.4%
Medicare HMO
Medical Loss
Ratio 97.3% 95.8% 90.4% 95.8% 90.3%
Health Risk
Medical Loss
Ratio (2) 87.3% 86.2% 85.1% 86.5% 85.1%
AUSHC
(Excluding PHC)
Commercial HMO
Medical Loss
Ratio 85.9% 83.1% 82.5% 84.5% 82.4%
Medicare HMO
Medical Loss
Ratio 97.3% 95.3% 90.4% 95.6% 90.3%
Health Risk
Medical Loss
Ratio 88.4% 86.4% 85.1% 87.2% 85.1%
PHC
Commercial HMO
Medical Loss
Ratio 88.9% 87.9% N/A 87.2% N/A
Medicare HMO
Medical Loss
Ratio 98.0% 98.2% N/A 97.9% N/A
Health Risk
Medical Loss
Ratio (2) 84.3% 85.7% N/A 84.5% N/A
(1) Membership at December 31, 1999 was adjusted to reflect the sale
of NYLCare Texas operations to Blue Cross Blue Shield of Texas
effective March 31, 2000.
(2) Reflects net benefits related to recoveries under a reinsurance
agreement with Prudential; recognition of a portion of the reinsurance
premium paid and the net amortization of amounts established as part
of the PHC purchase accounting.
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