In 2011, Aetna exceeded expectations and produced strong financial results.
We achieved full-year operating earnings(1) of $1.97 billion and full-year operating earnings per share(1) of $5.17, a per share increase of 40% percent compared to 2010. These results were primarily due to higher commercial underwriting margins primarily as a result of low medical utilization, continued pricing discipline, medical cost management and unit cost controls.
|(Millions, except per common share data)|
|FOR THE YEAR||2011||2010||CHANGE|
|Operating Expense Ratio(2)||19.8%||19.3%||.5 pts.|
|After-tax Net Income Margin||5.9%||5.2%||.7 pts.|
|AT YEAR END|
|Common Shares Outstanding||349.7||384.4||(9.0)%|
|PER COMMON SHARE|
(1) Operating earnings and operating earnings per share excludes from net income: net realized capital gains of $109 million ($168 million pretax) in 2011 and $184 million ($228 million pretax) in 2010; a one-time charge in connection with the voluntary early retirement program of $89 million ($137 million pretax) in 2011; transaction-related costs of $43 million ($66 million pretax) in 2010; severance and facilities charges of $31 million ($47 million pretax) in 2010; and litigation-related insurance proceeds of $102 million ($156 million pretax) in 2010. Management uses operating earnings to assess business performance and to make decisions regarding Aetna’s operations and allocation of resources among Aetna’s businesses. Operating earnings is also the measure reported to the Chief Executive Officer for these purposes.
(2) The operating expense ratio (GAAP basis) was 20.1% and 19.0% in 2011 and 2010, respectively. The operating expense ratio excludes pretax net realized capital gains from total revenue in both years, as discussed in (1) above. The operating expense ratio also excludes a one-time charge in connection with the voluntary early retirement program in 2011; transaction-related costs, severance and facility charges; and litigation-related insurance proceeds from 2010; as discussed in (1) above, each on a pretax basis.