Aetna Reports First-Quarter 2007 Results



HARTFORD, Conn., April 26, 2007 — Aetna (NYSE: ΑET) today announced first-quarter 2007 operating earnings of $0.81 per share, an increase of 27 percent compared to the prior-year quarter. The increase in operating earnings reflects revenue growth from quarter-over-quarter premium and fee rate increases and membership growth, as well as solid underwriting results and continued general and administrative expense efficiencies. Operating earnings exclude net realized capital gains (losses) and other items.1 First quarter 2007 net income was $0.81 per share, an increase of 19 percent over the prior-year quarter.



"Our strong financial results in the first quarter demonstrate that our disciplined strategy of profitable growth is working," said Ronald A. Williams, chairman and CEO. "Our customers and members clearly are responding to Aetna's value proposition of providing high-quality products and services and superior medical management capabilities that help manage costs. Those factors, as well as the steps we have taken to diversify our revenue and earnings, led to a strong performance across all of our health care product lines: medical, dental, pharmacy and behavioral.

"I also would note the recent announcement of our partnership with AARP. In addition to being a tremendous market opportunity, this new initiative will allow Aetna to work with AARP to increase access to health care for millions of Americans aged 50-64, further enhancing Aetna's leadership in providing affordable, high quality health care as well as enhanced prevention and wellness programs," Williams said.

"Aetna's continued growth in medical membership, revenue and earnings in the first quarter demonstrates our focus on delivering superior financial results," said Joseph M. Zubretsky, executive vice president and chief financial officer. "Two items stand out: Our disciplined pricing and medical management initiatives led to a very positive Commercial Medical Benefit Ratio of 79.6 percent. And our disciplined approach to managing administrative costs is reflected in the 110 basis-point decline quarter over quarter operating expense ratio, to 18 percent.2

"Looking forward to the remainder of 2007, we have confidence in our ability to perform at a high level, and therefore we are raising our annual operating earnings per share estimate to $3.35 for the year and $0.79 per share for the second quarter."3

Health Care business results

Health Care, which provides a full range of insured and self-insured medical, dental, pharmacy and behavioral health products and services, reported: Group Insurance business results

Group Insurance, which includes group life, disability and long-term care products, reported: Large Case Pensions business results

Large Case Pensions, which manages a variety of discontinued and other retirement and savings products, primarily qualified pension plans, reported: Total company results A live audio webcast of the first-quarter results conference call will begin at 8:30 a.m. ET today. The public may access the conference call through a live audio webcast available on Aetna's Investor Information link on the Internet at www.aetna.com. Financial, statistical and other information, including U.S. generally accepted accounting principles ("GAAP") reconciliations, related to the conference call also will be available on Aetna's Investor Information web site.

The conference call also can be accessed by dialing 800-819-9193, or 913-981-4911 for international callers. The company suggests participants dial in approximately 10 minutes before the call. Individuals who dial in will be asked to identify themselves and their affiliations.

A replay of the call may be accessed through Aetna's Investor Information link on the Internet at www.aetna.com or by dialing 888-203-1112, or 719-457-0820 for international callers. The replay access code is 3821463. Telephone replays will be available from 11:30 a.m. ET on April 26 until midnight ET on May 9.

Aetna is one of the nation's leading diversified health care benefits companies, serving approximately 34.9 million people with information and resources to help them make better informed decisions about their health care. Aetna offers a broad range of traditional and consumer-directed health insurance products and related services, including medical, pharmacy, dental, behavioral health, group life, long-term care and disability plans, and medical management capabilities. Our customers include employer groups, individuals, college students, part-time and hourly workers, health plans and government-sponsored plans. www.aetna.com



















1 Operating earnings exclude net realized capital gains and losses and other items, if any, from income from continuing operations as discussed below. Although the excluded items may recur, management believes that operating earnings and operating earnings per share provide a more useful comparison of the Company's underlying business performance from period to period. Management uses operating earnings to assess business performance and to make decisions regarding the Company's operations and allocation of resources among the Company's businesses. Operating earnings is also the measure reported to the Chief Executive Officer for these purposes. Each of the excluded items is discussed below: 2 Operating expenses as a percentage of revenue excludes net realized capital gains and losses from total revenue. Net realized capital gains and losses do not directly relate to underwriting or servicing of products for customers and are not directly related to the core performance of the Company's business operations. Operating expenses exclude the other items described in footnote 1.

3 Projected operating earnings per share exclude any future net realized capital gains or losses from income from continuing operations. The Company is not able to project the amount of future net realized capital gains or losses and therefore cannot reconcile projected operating earnings to projected income from continuing operations, or to a projected change in income from continuing operations, in any period. Projected operating earnings per share for full-year 2007 and second quarter 2007 assume approximately 536 million weighted-average diluted shares.

4 In order to provide useful information regarding profitability of the Company on a basis comparable to others in the industry, without regard to financing decisions, income taxes and amortization of other acquired intangible assets (each of which may vary for reasons not directly related to the performance of the underlying business), the Company's pretax operating margin excludes interest expense, income taxes and amortization of other acquired intangible assets. Management also uses pretax operating margin to assess the Company's performance, including performance versus competitors. Operating earnings used in the pretax margin calculation also exclude the items described in footnote 1.

5General and administrative expenses for the first quarter of 2006 includes the acquisition-related software charge discussed in footnote 1 above.

6 Actual common shares outstanding were 512.3 million and 567.0 million at March 31, 2007 and 2006, respectively.

7 Revenue and operating expense information is presented before income taxes. Operating earnings information is presented net of income taxes.

8 Represents members in consumer-directed health plans included in the Company's Commercial medical membership.

9 Represents members in products that allow these members access to the Company's network for a nominal fee.

10 Represents members who purchased medications through Aetna Rx Home DeliveryŽ, the Company's mail order pharmacy, during the quarterly period.

11 Health Care includes all medical, dental and other health care products. Commercial includes all health care products except Medicare and Medicaid.


ADDITIONAL INFORMATION; CAUTIONARY STATEMENT -- Certain information in this press release is forward looking, including our projections as to operating earnings. 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, including failure to achieve desired membership growth due to significant competition, reputational issues or other factors in key geographic markets where membership is concentrated; unanticipated increases in medical costs (including increased medical utilization, increased pharmacy costs, increases resulting from unfavorable changes in contracting or re-contracting 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); and the ability to reduce administrative expenses while maintaining targeted levels of service and operating performance. Other important risk factors include, but are not limited to: the ability to improve relations with providers while taking actions to reduce medical costs; the ability to successfully implement multiple strategic and operational initiatives simultaneously; lower levels of investment income from continued low interest rates; adverse government regulation (including legislative proposals eliminating or reducing ERISA pre-emption of state laws that would increase potential litigation exposure, and other proposals, such as patients' rights legislation, that would increase potential litigation exposure or mandate coverage of certain health benefits); adverse pricing actions by government payors; changes in size, product mix or medical cost experience of membership in key markets; our ability to integrate, simplify, and enhance our existing information technology systems and platforms to keep pace with changing customer and regulatory needs; the outcome of various litigation and regulatory matters, including litigation and ongoing reviews of business practices by various regulatory authorities (including the current industry wide investigation into insurance brokerage practices concerning broker compensation arrangements, bid quoting practices and potential antitrust violations being conducted by the New York Attorney General, the Connecticut Attorney General and others, and for which the Company has received and may receive subpoenas); and increases in medical costs or Group Insurance claims resulting from any acts of terrorism, epidemics or other extreme events. For more discussion of important risk factors that may materially affect Aetna, please see the risk factors contained in Aetna's 2006 Annual Report on Form 10-K, on file with the Securities and Exchange Commission ("SEC"). You also should read Aetna's March 31, 2007 Quarterly Report on Form 10-Q when filed with the SEC for a discussion of Aetna's historical results of operations and financial condition.




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