Aetna Reports Third Quarter 2000 Earnings.Business/Technology 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)--Nov. 1, 2000 Aetna Aetna, volcano: see Etna, Italy. Inc. (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. ) today reported third 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 $158.1 million, or $1.10 per common share, compared with $184.1 million, or $1.21 per common share, for the third quarter of 1999(2). The company reported operating earnings of $134.0 million, or $0.94 per common share, for the second quarter of 2000. "With the ING transaction on track for a December December: see month. closing, we are focusing our efforts on improving our health care business, which was roughly level with last quarter," said William William, crown prince of Germany William or Frederick William, 1882–1951, crown prince of Germany, son of William II. In World War I he commanded (1914) an army on the Western Front and was nominal commander in the German attack H. Donaldson People People whose family name is or was Donaldson include:
"As we prepare for the spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. of our health care operations to shareholders, we are making considerable progress on a number of actions designed to increase our overall financial performance. First, we are continuing to implement significant price increases and shift medical management resources to a more regional structure to enhance our ability to control medical costs. "In our 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. book of business, we saw an 80 basis point improvement in the commercial 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, medical loss ratio (MLR MLR mixed lymphocyte reaction. MLR Myocardial laser revascularization, see there ) during the quarter, as pricing levels began to better reflect the trend in medical costs. However, the Prudential Prudential is the name of two different companies and buildings named after them: Companies:
tr. & intr.v. wors·ened, wors·en·ing, wors·ens To make or become worse. Noun 1. worsening - process of changing to an inferior state decline in quality, deterioration, declension experience, and are taking a number of corrective actions A corrective action is a change implemented to address a weakness identified in a management system. Normally corrective actions are instigated in response to a customer complaint, abnormal levels if internal nonconformity, nonconformities identified during an internal audit or . "Second, we remain committed to our plan to exit roughly half of our 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 markets on January 1, 2001, and believe that this will result in substantial improvement in the results of our Medicare HMO business. "We also are finalizing our overall commercial market strategy, and have already identified certain commercial product markets that do not meet our profitability or strategic targets. These product offerings will be 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: or sold. "Third, we are completing the first level of cost reductions that were announced earlier in the year and are taking aggressive action to reduce our expense base further for 2001, in light of anticipated product or market exits, continued membership 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, and our smaller size as a stand-alone health care company. "Fourth, we remain committed to our goal of remaking 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 business model to meet consumer demands for choice and flexibility, and to enhance our relations with physicians and hospitals. To that end, we recently introduced a series of open access health plans with Navigator See Netscape Navigator, Netscape and Norton Navigator. Navigator - Netscape Navigator (TM), a state-of-the-art customized Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the resource tool, representing an important step in remaking our product portfolio. "Finally, the appointment of Dr. John W. Rowe, a distinguished physician and proven health care manager, as President and CEO of Aetna U.S. Healthcare, underscores our commitment to both strengthen management and create a more profitable, more effective company that is member-centric in its philosophy. As we reorient Re`o´ri`ent a. 1. Rising again. The life reorient out of dust. - Tennyson. Verb 1. our business and service processes, our goal is to remove hassles and use our wealth of information to enhance physician effectiveness and help our members make more informed decisions about their health," Donaldson said. Aetna U.S. Healthcare Operating Earnings Level with Second Quarter 2000 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. , dental and group insurance products, reported operating earnings of $77.0 million, a decline from the $131.3 million reported in the third quarter 1999, but roughly level with the $74.0 million reported in the second quarter 2000. Third quarter 2000 reflected higher medical costs than the prior year, in addition to: a higher level of investment income, largely due to equity partnership distributions; severance The act of dividing, or the state of being divided. 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; and net favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. contract developments, including a government plan arrangement related to prior years. The decline in operating earnings from the prior year reflects significantly higher medical costs for both the commercial and Medicare HMO products. During the quarter, Aetna U.S. Healthcare commercial HMO medical costs (excluding Prudential HealthCare) were approximately 10 percent higher than the third quarter of 1999, in keeping with the medical cost trend experienced during the second quarter. As a result of these higher medical costs, the Aetna U.S. Healthcare commercial HMO medical loss ratio (medical costs as a percent of revenues, or MLR) was 85.1 percent (excluding Prudential HealthCare). However, this represents an 80 basis point improvement over the second quarter of 2000, as price increases outpaced the medical cost trend. The Prudential HealthCare commercial HMO business weakened weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. from the
second quarter due to higher-than-anticipated medical costs, including
additional medical expenses from prior periods. As a result, the PHC PHC Primary health care, see there commercial HMO MLR was 93.9 percent, resulting in an overall Aetna U.S.
Healthcare commercial HMO risk MLR of 87.4 percent for the third quarter
of 2000. The company is taking actions to improve the PHC results,
including: increasing premiums, bolstering utilization management Utilization management is the evaluation of the appropriateness, medical need and efficiency of health care services procedures and facilities according to established criteria or guidelines and under the provisions of an applicable health benefits plan. resources in targeted areas, and re-enrolling PHC members into Aetna
U.S. Healthcare products.The Medicare HMO business continued to soften, reflecting the unfavorable impact of the resolution or termination of certain provider contracts, as well as higher medical costs. The overall Medicare HMO MLR rose to 99.0 percent in the third quarter of 2000. Earlier this year, the company announced its intent to withdraw from certain markets on January 1, 2001, representing approximately 340,000 members. Excluding these markets, the overall Medicare HMO MLR was approximately 92.5 percent. Total health membership stood at 19.2 million as of September 30, 2000. Total HMO membership declined from year-end due to continued attrition in the Prudential HealthCare membership, which more than offset growth in the Aetna U.S. Healthcare commercial HMO membership, both risk and nonrisk. Aetna U.S. Healthcare's overall provider network was comprised of 455,000 providers as of October 1, 2000, representing a 5.2 percent increase in the PPO PPO abbr. preferred provider organization PPO Managed care Preferred provider organization, see there Infectious disease Pleuropneumonia-like organism, see there network and a 10.3 percent increase in the HMO network HMO network Managed care An HMO that contracts with local hospitals to provide in-patient medical services, and with 2 or more independent groups of physicians to provide health services; the group is paid a set amount per HMO enrollee per month; in some, staff since the beginning of the year. Total expenses increased over the third quarter 1999 due to the inclusion of a full quarter of Prudential HealthCare. Expenses also were higher than last quarter, as increases in sales and marketing expenses associated with enrollment season exceeded the impact of continued expense control initiatives. Total expenses include approximately $12.3 million in severance costs, primarily associated with Prudential HealthCare. Group Insurance and Other Health operating earnings rose to $82.4 million for the third quarter of 2000, compared with $73.4 million for the third quarter of 1999. Earnings rose primarily due to improved disability experience, and improvement in margins for employer-funded products, offset in part by lower life results. Large Case Pensions, which manages a variety of discontinued 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 $19.7 million in operating earnings for the third quarter 2000, which includes approximately $9 million of equity partnership distributions. 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 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 third quarter 2000 operating earnings of $67.0 million, 21 percent higher than the $55.5 million reported for the third 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 $18.7 billion, or 30 percent, over the prior-year quarter to $81.6 billion as of September 30, 2000. Despite stock market declines in September of 2000, AFS assets under management and administration grew by $1.1 billion from the second quarter. Aetna International, which sells life insurance, health and pension products in targeted emerging markets, reported third quarter 2000 operating earnings of $63.2 million, a 45 percent increase over the $43.5 million reported for the third quarter of 1999. The increase primarily was due to the inclusion of earnings from the Aetna Heiwa Life Insurance Company in Japan, acquired in fourth quarter 1999, as well as higher results in Brazil, Mexico and Taiwan. Third quarter 1999 operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. includes results from businesses in Canada, certain Mexico operations and Venezuela, which were sold. On July 20, 2000, Aetna announced a definitive agreement to sell Aetna Financial Services and Aetna International to ING Groep N.V. 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. Aetna shareholders of record as of October 6, 2000, are entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: to vote on the transaction at a special shareholders' meeting shareholders' meeting n. a meeting, usually annual, of all shareholders of a corporation (although in large corporations only a small percentage attend) to elect the Board of Directors and hear reports on the company's business situation. , scheduled for November 30, 2000. 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. , grew by 15 percent to $8.1 billion for the third quarter of 2000, primarily due to the inclusion of Prudential HealthCare. Third quarter 1999 total revenues were $7.1 billion. Net Income for the third quarter 2000 was $177.4 million, or $1.24 per common share, compared with $195.3 million, or $1.29 per common share, for the third quarter of 1999. Included in third quarter 2000 net income are net realized capital gains of $24.5 million after tax, compared with $11.2 million after tax in net realized capital gains in the third quarter of 1999. A Fortune 50 company, Aetna is the nation's leading health and related benefits company with 19.2 million health members, 14.5 million dental members and 11.4 million group insurance members. Information about Aetna is available at www.aetna.com. The public can access the Aetna third quarter 2000 conference call today at 9 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy by dialing 212-896-6085. CAUTIONARY STATEMENT - Certain information in this press release is forward looking, including statements regarding the future business prospects of our health business, the adequacy of certain commercial HMO pricing levels, the potential of certain actions being taken to address the performance of the Prudential HealthCare business, the evaluation of our commercial health markets, the 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). of our health product portfolio, our plans to improve 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 Groep N.V. 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 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. 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. , Reports on Form 10-Q Form 10-Q See 10-Q. for the periods ended March 31, 2000, and June 30, 2000, filed with the SEC, and Report on Form 10-Q for the period ended September 30, 2000, to be filed with the SEC, for a discussion of Aetna's results of operations and financial condition. (1) Operating earnings exclude net realized capital gains or losses and a $5.2 million after-tax charge related to a shareholder litigation settlement agreement. All per-share amounts are 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. Third quarter 1999 results reflect the inclusion of Prudential HealthCare from August 6, 1999, and also include $14.1 million in after-tax Year 2000 costs. (2) Results for the third quarter of 1999 and other comparisons reflect the restatements announced on February 1, 2000.
Consolidated Statements of Income
(Millions, except share and per common share data)
3 Months Ended 9 Months Ended
September 30, September 30,
2000 1999 2000 1999
Revenue:
Premiums $ 6,589.7 $ 5,574.8 $ 19,742.7 $ 14,598.0
Net investment income 816.1 748.6 2,340.5 2,232.6
Fees and other
income (1) 693.5 651.9 2,106.6 1,755.7
Net realized capital
gains (losses) 32.7 93.6 (20.9) 120.5
Total revenue 8,132.0 7,068.9 24,168.9 18,706.8
Benefits and
expenses:
Current and future
benefits (2) 6,088.4 5,147.1 18,248.9 13,647.5
Operating expenses 1,506.6 1,298.3 4,428.7 3,427.6
Interest expense 79.7 72.4 230.4 201.1
Amortization of
goodwill and other
acquired intangible
assets 117.4 111.7 351.3 325.1
Amortization of
deferred policy
acquisition costs 68.5 52.2 185.6 153.9
Reduction of reserve
for loss on
discontinued
products -- -- (146.0) (77.2)
Total benefits and
expenses 7,860.6 6,681.7 23,298.9 17,678.0
Income before
income taxes 271.4 387.2 870.0 1,028.8
Income taxes 94.0 191.9 336.8 446.4
Net income 177.4 195.3 533.2 582.4
Less: preferred
stock dividends (3) -- 2.9 -- 30.5
Net income applicable
to common ownership $ 177.4 $ 192.4 $ 533.2 $ 551.9
Shareholders' equity $ 11,313.4 $ 11,316.4
(1) Includes $27.7 million and $111.7 million, for the three and nine
months ended September 30, 2000, ($40.3 million for August 6, 1999 to
September 30, 1999) 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 $40.9 million and $88.2 million, for the three and nine
months ended September 30, 2000, ($25.5 million for August 6, 1999 to
September 30, 1999) 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.
Consolidated Statements of Income (Continued)
3 Months Ended September 30,
2000 1999
Results per common share:
Operating earnings
excluding other items- (1)(2)
Basic $ 1.12 $ 1.22
Assuming dilution $ 1.10 $ 1.21
Operating earnings
including other items-
assuming dilution (1)(2) $ 1.07 $ 1.21
Net Income -
Basic $ 1.26 $ 1.30
Assuming dilution $ 1.24 $ 1.29
Common shareholders' equity
Common stock dividends $ .20 $ .20
Weighted average common
shares - basic (3) 141,194,810 148,332,613
Weighted average common
shares - diluted (3) 143,095,101 149,351,325
Results per common share: 9 Months Ended September 30,
2000 1999
Operating earnings
excluding other items- (1)(2)
Basic $ 3.37 $ 3.29
Assuming dilution $ 3.33 $ 3.27
Operating earnings
including other items-
assuming dilution (1)(2) $ 3.86 $ 3.61
Net Income -
Basic $ 3.78 $ 3.84
Assuming dilution $ 3.73 $ 3.81
Common shareholders' equity $ 80.04 $ 75.61
Common stock dividends $ .60 $ .60
Weighted average common
shares - basic (3) 141,150,636 143,582,163
Weighted average common
shares - diluted (3) 142,764,219 144,745,852
(1) Operating earnings for the three and nine months ended
September 30, 1999 include PHC earnings from August 6, 1999.
(2) Other items include: for the nine months ended September 30,
2000 and 1999, an after-tax benefit from a reduction of the reserve
for anticipated future losses on discontinued products in the Large
Case Pensions segment; for the nine months ended September 30, 2000,
an assessment related to the New Jersey HMO Insolvency Fund in the
Aetna U.S. Healthcare segment; and for the three and nine months ended
September 30, 2000, a shareholder litigation settlement agreement in
Corporate.
(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
September 30, 2000 and 1999 were 141.4 million and 149.7 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 Third Quarter Financial Supplement available from Robyn S.
Walsh, Investor Relations, (860) 273-6184, in the Company's 2000 Third
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 9 Months Ended
September 30, September 30,
2000 1999 2000 1999
Aetna U.S. Healthcare:
Revenue $6,415.6 $5,569.3 $19,344.1 $14,479.4
Operating earnings
excluding other item $ 77.0 $ 131.3 $ 282.8 $ 341.6
Assessment - New
Jersey HMO
Insolvency Fund -- -- (14.6) --
Operating earnings
including other item $ 77.0 $ 131.3 $ 268.2 $ 341.6
Aetna Financial
Services:
Revenue $ 450.5 $ 403.2 $ 1,305.9 $ 1,150.7
Operating earnings $ 67.0 $ 55.5 $ 190.3 $ 153.7
Aetna International:
Revenue $ 955.6 $ 712.2 $ 2,706.8 $ 2,069.7
Operating earnings $ 63.2 $ 43.5 $ 164.8 $ 131.9
Large Case Pensions:
Revenue $ 270.2 $ 288.7 $ 821.1 $ 879.9
Operating earnings
excluding other item $ 19.7 $ 20.9 $ 50.7 $ 64.8
Reduction of reserve
for loss on
discontinued
products -- -- 94.9 50.2
Operating earnings
including other item $ 19.7 $ 20.9 $ 145.6 $ 115.0
Corporate:
Interest $ (50.8) $ (45.7) $ (147.6) $ (126.4)
Other (18.0) (21.4) (64.9) (62.8)
Reinvestment of Life
sale proceeds -- -- -- .6
Net operating
expenses excluding
other item (68.8) (67.1) (212.5) (188.6)
Shareholder
litigation
settlement agreement (5.2) -- (5.2) --
Net operating
expenses including
other item $ (74.0) $ (67.1) $ (217.7) $ (188.6)
Total Company:
Operating earnings $ 158.1 $ 184.1 $ 476.1 $ 503.4
Assessment - New
Jersey HMO
Insolvency Fund -- -- (14.6) --
Reduction of reserve
for loss on
discontinued
products -- -- 94.9 50.2
Shareholder litigation
settlement agreement (5.2) -- (5.2) --
Net realized capital
gains (losses) 24.5 11.2 (18.0) 28.8
Net income $ 177.4 $ 195.3 $ 533.2 $ 582.4
(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 nine months ended September
30, 2000 and 1999 include PHC earnings in the Aetna U.S.
Healthcare segment and interest expense related to funding the
transaction in Corporate.
Aetna U.S. Healthcare Enrollment and Other Statistics
(Thousands)
% Change From:
Sept. 30, Dec. 31, Sept. 30, Dec. 31, Sept. 30,
2000 1999 (1) 1999 1999 1999
Membership by Product:
HMO - Risk
Commercial 7,746 8,219 8,669 (5.8) (10.6)
Medicare 619 703 706 (11.9) (12.3)
Medicaid 144 172 171 (16.3) (15.8)
HMO - Nonrisk 946 746 772 26.8 22.5
Total HMO 9,455 9,840 10,318 (3.9) (8.4)
POS 3,713 3,925 3,960 (5.4) (6.2)
PPO 3,836 3,970 3,936 (3.4) (2.5)
Total Managed Care
Membership 17,004 17,735 18,214 (4.1) (6.6)
Indemnity 2,188 2,755 2,807 (20.6) (22.1)
Total Health
Membership 19,192 20,490 21,021 (6.3) (8.7)
Total Group Insurance 11,400 11,781 11,775 (3.2) (3.2)
Dental Membership 14,499 15,750 15,817 (7.9) (8.3)
Three Months Ended Nine Months Ended
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
2000 2000 1999 2000 1999
AUSHC
Commercial HMO
Medical Loss Ratio 87.4% 86.8% 83.9% 86.0% 83.0%
Medicare HMO Medical
Loss Ratio 99.0% 97.3% 91.8% 96.8% 90.8%
Health Risk Medical
Loss Ratio (2) 87.4% 87.3% 84.9% 86.8% 85.0%
AUSHC (Excluding PHC)
Commercial HMO
Medical Loss Ratio 85.1% 85.9% 82.6% 84.7% 82.4%
Medicare HMO
Medical Loss Ratio 99.5% 97.3% 90.9% 96.9% 90.5%
Health Risk
Medical Loss Ratio 87.7% 88.4% 84.8% 87.4% 85.0%
PHC (3)
Commercial HMO
Medical Loss Ratio 93.9% 88.9% 87.2% 89.2% 87.2%
Medicare HMO
Medical Loss Ratio 92.9% 98.0% 98.3% 96.5% 98.3%
Health Risk Medical
Loss Ratio (2) 86.3% 84.3% 85.2% 85.0% 85.2%
(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.
(3) PHC was acquired on August 6, 1999.
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