Company to reduce work force, record fourth-quarter charge
HARTFORD, Conn., December 11, 2002 — Aetna (NYSE: ΑET) announced today that the company will record an after-tax charge of approximately $30 million in the fourth quarter related to severance and associated facilities costs. The charge, to be taken against fourth-quarter operating results, is associated with a reduction in the company's work force of approximately 690 positions.
These actions are intended to:
Make our company's cost structure more competitive.
Better align resources with our reduced membership base.
Position the company for future profitable growth.
Once these and previously announced actions are completed, Aetna expects to have approximately 27,500 employees.
Aetna is one of the nation's leading providers of health care, dental, long-term care and disability benefits, serving approximately 13.9 million medical members, 11.9 million dental members and 11.7 million group insurance customers, as of September 30, 2002. The company has expansive nationwide networks of more than 539,000 health care services providers, including over 327,000 primary care and specialist physicians and 3,300 hospitals. For more information about Aetna, please visit the company's website at www.aetna.com.
ADDITIONAL INFORMATION; CAUTIONARY STATEMENT - Certain information in this press release is forward looking, including, without limitation, the statements regarding competitiveness, alignment of resources and future growth. Forward-looking information is based on management's estimates, assumptions and projections, and is subject to significant uncertainties and other factors, many of which are beyond Aetna's control. Important risk factors could cause actual future results and other future events to differ materially from those currently estimated by management. Those risk factors include, but are not limited to: 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; as well as changes in medical cost estimates due to the necessary extensive judgment that is used in the medical cost estimation process, the considerable variability inherent in such estimates, and the sensitivity of such estimates to changes in medical claims payment patterns and changes in medical cost trends); continued decreases in membership levels; increases in medical costs or Group Insurance claims resulting from any future terrorism; the ability to achieve targeted savings from work force reductions and to otherwise reduce administrative expenses in light of significant membership reductions being experienced; the ability to maintain targeted levels of service, and improve relations with providers, as well as operating performance, while making significant staff reductions and taking actions to reduce medical costs; the ability to successfully implement Aetna's new operating model; lower levels of investment income from continued lower interest rates; adverse government regulation (including legislative proposals to eliminate or reduce ERISA pre-emption of state laws that would increase potential litigation exposure, and other proposals, such as the Patients' Bill of Rights, that would increase potential litigation exposure or mandate coverage of certain health benefits); adverse pricing actions by government payors; changes in size, product mix and medical cost experience of membership in key markets, particularly given the significant membership reductions being experienced; and the outcome of litigation and regulatory matters, including numerous health care class actions and ongoing reviews of business practices by various regulatory agencies. For more discussion of important factors that may materially affect Aetna, please see the risk factors contained in Aetna's 2001 Report on Form 10-K, on file with the Securities and Exchange Commission. You also should read Aetna's 2001 Form 10-K and 2002 third-quarter Form 10-Q filed with the Securities and Exchange Commission for a discussion of Aetna's historical results of operations and financial condition.