Stock Split Frequently Asked Questions




What is a two-for-one stock split?
In a two-for-one stock split, effected as a stock dividend, the shareholder receives one additional share for each share he or she owns.



What is the difference between a two-for-one stock split and a stock dividend?
They are effectively the same. In both cases, shareholders will own twice as many shares.



Why are you splitting the stock now?
Aetna's Board of Directors made a decision to split the stock in order to make the shares more affordable to a broader range of potential investors and to increase liquidity in the trading of Aetna shares.



How does a two-for-one stock split actually work?
After a two-for-one stock split, shareholders receive an additional share for every share they currently own and will therefore have twice as many shares after the split as before the split. Accordingly, the price of each share will be roughly half the previous price, though the total value of the holdings immediately after the split will be the same as before the split. For example, a shareholder who owns 100 Common Shares of Aetna at a market price of $100 as of the Record Date has a total value of $10,000. After the split, this shareholder will own 200 shares valued at approximately $50 per share for a total investment value of $10,000. The shareholders' investment value remains the same until the stock price moves up or down.



Did the shareholders vote to approve the stock split?
Shareholder approval was not needed as the split was effected as a stock dividend and the number of shares outstanding after the split is still below the maximum number of shares authorized by our shareholders. Only Board of Directors' approval was necessary.



When is the Record Date?
February 25, 2005



When is the Distribution Date?
March 11, 2005



When is the Ex-Distribution Date?
March 14, 2005 is the date on which Aetna Common Shares will trade on the New York Stock Exchange at the new split adjusted price.



What happens if I sell my shares on or between the Record Date and the Distribution Date?
Between the Record Date, February 25, 2005, and the Distribution Date, March 11, 2005, two separate markets will exist for Aetna's Common Shares. Shares trading under the symbol "AET" will continue to trade at the higher pre-split price in the "regular way market." Shareholders who sell in the regular way market will receive value for the shares they sell and are not entitled to the split shares thereafter. By selling "regular way", shareholders transfer their rights to the split shares to the buyer through a mechanism called a "due bill." "When issued" trading is reported under the symbol AETWI. When issued trading ceases on the Distribution Date. For further information about "when issued" trading, you should contact your broker.



When will Aetna stock begin trading on a split basis only?
On March 14, 2005, also known as the "Ex"-Date.



What exactly will I receive?
For each Aetna Common Share held of record at the close of business on February 25, 2005, you will receive one additional share of Aetna stock. Since the stock split shares are being issued to registered shareholders in book-entry form rather than in the form of a stock certificate, holders of record will not receive a new stock certificate representing the additional stock split shares.



Will I receive a stock certificate for the new shares?
No. If you are a registered holder of Aetna Common Shares, you will receive the stock split shares in book-entry form rather than in the form of stock certificates. This means that your shares will be credited to an account registered in your name on the books of Aetna, which are maintained by Aetna's transfer agent, EquiServe Trust Company, N.A., rather than sent to you in physical stock certificate form.



When will I receive my stock split shares?
On or about March 11, 2005, Aetna's transfer agent, EquiServe Trust Company, N.A., will send to registered holders a personalized Stock Distribution Statement about their new book-entry shares including any shares held in EquiServe's DirectSERVICE Investment Program.



Is it better to buy now or wait until after the split?
We cannot provide shareholders with investment advice.



Can we buy shares between the announcement date and the Record Date?
Yes.



If my shares are held in street name, how will I be notified?
Your broker will notify you.



I own shares through the DirectSERVICE Investment Program. How will my new shares be registered on my account?
New shares are registered to your account in book entry form.



When is my last chance to invest through the DirectSERVICE Investment Program and still be entitled to split shares?
Any time prior to the Record Date.



Will there be a "when issued" market for the split shares?
The New York Stock Exchange ("NYSE") is expected to authorize a "when issued" market for the new split shares. The "when issued" market can begin as early as two days prior to the Record Date, February 25, 2005, and ends at the close of business on the Distribution Date, March 11, 2005. Aetna Common Shares will trade under the symbol AETWI in the "when issued" market. The NYSE will make the decision if and when a "when issued" market will commence.



When can I sell my split shares?
Some time after the Record Date, February 25, 2005, a "when issued" market will be established in which you can sell your current holdings and your expected distribution in order to effect a round lot sale. After the March 14, 2005 "Ex"-Date, only the post-split shares will trade.



Are the stock split shares to be distributed subject to federal income tax?
We have been advised by counsel that, under present federal income tax laws, your receipt of shares issued under this distribution is not taxable as income to you. However, if you sell any shares, this distribution must be considered in figuring the tax basis of your shares to determine your gain or loss for federal income tax purposes. For example, if prior to the dividend you own 100 shares with a basis of $50 per share, half of the basis in each of those shares would be allocated to the corresponding new share, resulting in a basis of $25 per share for each of the 200 shares owned after the split. For tax purposes, the holding period of the new shares is the same as for the old shares on which they were issued.

Under existing U.S. laws and regulations, the new shares issued will have a basis equal to one-half the adjusted cost or other basis of the shares on which they were distributed. The basis for computing gain or loss concerning the balance of your stock is reduced to one-half of its former basis. For tax purposes, the holding period for the new shares is the same as for the old shares on which they were issued. Although this tax information is provided for your assistance, we are not providing personal tax advice. You should consult your personal tax advisor regarding the tax consequences of any transaction you undertake with these shares.

Consult your Personal Tax Advisor: The information contained on the Aetna Web site does not constitute tax advice. It does not purport to be complete or to describe the consequences that may apply to particular categories of shareholders. You should consult your own tax advisor regarding the calculation of your tax basis and the tax consequences of any distribution.



Will the stock split change my percentage ownership in Aetna?
No, as all Aetna shareholders will receive one additional share for each share held as of the February 25, 2005 Record Date.



When will the market price reflect the split?
Between the Record Date and the Distribution Date, two markets will exist for Aetna Common Shares, "regular way," reflecting pre-split price and "when issued," reflecting post-split price. Beginning on the March 14, 2005 "Ex-Date, only the post-split shares will trade.



Will I be able to vote my stock split shares at the 2005 Annual Meeting?
No. The record date for the 2005 Annual Meeting is February 25, 2005 and only shares outstanding on that date may be voted at the Annual Meeting. The stock split shares also have a record date of February 25, but they will not be issued until March.



Where will the notification be mailed?
If you are a registered shareholder, your notification will be mailed to the address our transfer agent, EquiServe Trust Company, N.A. has on file. To verify the accuracy of your address, you can contact EquiServe directly at 800-446-2617. If you hold your shares in a brokerage account in the broker's name, the additional shares will be sent directly to your broker.



How can I update my address?
If you are a registered shareholder, you can update your address by contacting our transfer agent, EquiServe Trust Company, N.A., at 800-446-2617.



What is "book-entry"?
Book-entry form of registered ownership allows you to own shares without having paper stock certificates in your possession. You are the record owner and enjoy the same shareholder benefits as you would with certificated shares.



What are the benefits of book-entry shares?
Book-entry ownership eliminates some of the problems associated with paper certificates such as storage and safety of securities. Book-entry shares also eliminate the requirement for physical movement of stock certificates at the time of sale or transfer of ownership.



How do I keep track of my book-entry shares?
If you hold your book-entry shares through the DirectSERVICE Investment Program, you will receive a statement or confirmation detailing any activity affecting your book entry shares shortly after a transaction has taken place. You may also receive statements at other points of time. If you have book-entry shares but do not participate in the DirectSERVICE Investment Program, you will receive a statement of your holdings on a yearly basis. You may, of course, request an additional statement at any time by contacting EquiServe Trust Company, N.A. at 800-446-2617.



I have stock certificates. Can I convert them to book-entry shares?
Yes. Simply send your stock certificates to EquiServe Trust Company, N.A., P.O. Box 43070, Providence, RI 02940-3070, with written instructions to deposit them in your account as book-entry items. Do not endorse the certificates or complete the assignment section. Certificates should be sent to EquiServe at the address above by registered or certified mail with return receipt requested, or some other form of traceable mail, and properly insured. The insured amount represents the replacement cost that will be charged to you if your certificates are lost in transit to EquiServe. You can contact EquiServe at 800-446-2617 to obtain the replacement cost for insurance purposes. EquiServe will provide to you a statement confirming the deposit of your shares to your book-entry account.



Can I get stock certificates for my book-entry shares?
You may request stock certificates for the whole shares in your book-entry account at any time. Simply contact EquiServe Trust Company, N.A. at 800-446-2617 with your request and a stock certificate for the requested number of whole shares will be sent to you within 7-10 business days and delivered by first class mail.



What should I do with the stock certificates I currently hold? Are they still valid?
The stock certificates that you currently hold are still valid and should not be destroyed or exchanged. Those certificates continue to represent the same number of shares as shown on their face and should be kept in a secure place.



What happens if I lose my Stock Distribution Statement?
Unlike stock certificates, the Stock Distribution Statement is not a negotiable document, so there is no replacement fee. You can request replacement statements at any time by contacting EquiServe Trust Company, N.A. at 800-446-2617. You will receive an annual statement from EquiServe reporting the current share balance in your book-entry account at EquiServe.



Who can I contact for additional information?
Click here for a listing of contacts.







Related Links:

Aetna Reports Fourth Quarter And Full-year 2004 Results

Aetna Declares 2 for 1 Stock Split

4Q04 Financial Supplement
(PDF: 951 KB / 16 pages)

4Q04 Earnings Tables
(PDF: 22 KB / 5 pages)

Guidance Summary
2/10/05

(PDF: 151 KB / 2 pages)




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