Aetna Reports Third-Quarter 2007 Results

HARTFORD, Conn., October 25, 2007 — Aetna (NYSE: AET) today announced third-quarter 2007 operating earnings of $0.97 per share. Operating earnings reflect approximately $16 million after tax, or $.03 per share, of favorable Medicare prior-period reserve development related to the first half of 2007. The increase in operating earnings per share reflects 11 percent total revenue growth, primarily from quarter-over-quarter membership growth and premium and fee rate increases, as well as solid underwriting results and continued general and administrative expense efficiencies. This improvement also reflects the benefit of continued share repurchases. Operating earnings exclude net realized capital gains (losses) and other items.1 Third quarter 2007 net income was $0.95 per share, an increase of 12 percent over the prior-year quarter.

"Aetna's third-quarter results once again indicate that our overall strategy is working," said Ronald A. Williams, chairman and CEO. "We're growing profitably in the marketplace by listening to our customers and building tools to help people become much better consumers of health care services. We continue to lead in offering products and services that help our customers better manage health care quality and costs.

"We also continued to invest in our businesses in the quarter. We completed the acquisition of Schaller Anderson, a leading provider of health care management services for Medicaid plans. In early October, we acquired Goodhealth Worldwide, which strengthens our Aetna Global Benefits business. These additions further strengthen and broaden our revenue stream and provide us with new opportunities for profitable growth."

"Three things stand out in our third-quarter results," said Joseph M. Zubretsky, executive vice president and CFO. "First, our continued focus on disciplined underwriting, pricing and effective medical cost management resulted in an excellent Commercial Medical Benefit Ratio. Second, the organic growth in our medical membership reflected meaningful increases across our businesses, including newer customer markets such as Individual, Student Health and Government and Labor. Third, we continued to show progress in managing our capital.

"Based on these results, we now expect to achieve full-year operating earnings per share of $3.482 an increase over our previous guidance of $3.40 to $3.42. Looking ahead to 2008, we project our operating earnings per share to increase by 15 percent to $4.00."

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 third-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 Financial, statistical and other information, including 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 888-218-8125, or 913-312-0418 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 or by dialing 888-203-1112, or 719-457-0820 for international callers. The replay access code is 6409433. Telephone replays will be available from 11:30 a.m. ET on October 25 until midnight ET on November 8, 2007.

Aetna is one of the nation's leading diversified health care benefits companies, serving approximately 36.4 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 and disability plans, and medical management capabilities and health care management services for Medicaid plans. Our customers include employer groups, individuals, college students, part-time and hourly workers, health plans, government-sponsored plans and expatriates.

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: For a reconciliation of these items to financial measures calculated under U.S. generally accepted accounting principles (GAAP), refer to the tables on pages 8 through 9 and 11 through 12 of this press release.

2 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 the full-year 2007 assumes approximately 528 million weighted-average diluted shares.

3 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).

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 or 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 other items described in footnote (1).

5 General and administrative expenses for the nine months ended September 30, 2006 include the debt refinancing charge, insurance-related charge and the acquisition-related software charge discussed in footnote (1) above.

6 Actual common shares outstanding were 500.4 million and 522.0 million at September 30, 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 Includes approximately 575,000 Medicaid (111,000 Insured and 464,000 ASC) and 43,000 Commercial ASC members at September 30, 2007 from the Schaller Anderson acquisition.

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

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

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

12 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 and weighted-average diluted shares. 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 rate increases and/or profitable 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; reduced levels of investment income from 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 September 30, 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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