"With the ING transaction on track for a December closing, we are focusing our efforts on improving our health care business, which was roughly level with last quarter," said William H. Donaldson, Chairman and CEO of Aetna.

"As we prepare for the spin-off 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 book of business, we saw an 80 basis point improvement in the commercial HMO medical loss ratio (MLR) during the quarter, as pricing levels began to better reflect the trend in medical costs. However, the Prudential HealthCare MLR deteriorated significantly. While we are disappointed with these results, we have identified a subset of geographic markets and large accounts that represent the bulk of the worsening experience, and are taking a number of corrective actions.

"Second, we remain committed to our plan to exit roughly half of our Medicare 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 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 in Prudential HealthCare, and our smaller size as a stand-alone health care company.

"Fourth, we remain committed to our goal of remaking 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^TM, a state-of-the-art customized Internet 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 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, 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 costs primarily related to the Prudential HealthCare business; and net favorable 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 from the second quarter due to higher-than-anticipated medical costs, including additional medical expenses from prior periods. As a result, the PHC 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 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 network and a 10.3 percent increase in the HMO network 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 customers, reported $19.7 million in operating earnings for the third quarter 2000, which includes approximately $9 million of equity partnership distributions.

Financial Services and International Show Gains

Aetna Financial Services (AFS), which markets a wide array of retirement and investment products to small businesses, educational institutions, state and local governments, nonprofit organizations 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 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 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 to vote on the transaction at a special shareholders' meeting, scheduled for November 30, 2000.

Total Aetna Revenues, including net realized capital gains or losses, 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 by dialing 212-896-6085.

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 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.

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 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 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 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 administrative functions and integrate management information systems); adverse government regulation (including legislative proposals to eliminate or reduce ERISA pre-emption of state laws that would increase potential 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 health care class actions and ongoing reviews of business practices by various regulatory agencies. 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 of all of the closing conditions specified in the transaction documents; and the results of, and credit ratings assigned 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, Reports on Form 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.

For more information about Aetna Inc., please visit the company's website at www.aetna.com.