A.M. Best Positive on Aetna’s Litigation Settlement and Other Key Developments

May 27, 2003

A.M. Best Co. said it views positively Aetna Inc.’s settlement of the national class action lawsuits with more than 700,000 physicians, state and other medical societies pending in the federal court for the Southern District of Florida, as well as multiple state court actions filed against the company.

Aetna’s settlement, which is subject to court approval, for $170 million, and the commitment to deliver value estimated at $300 million to the physician community through business process improvements, should begin to address directly several issues that have somewhat offset the positive factors of the organization’s financial strength rating. Therefore, the expected after-tax charge of $75 million in the second quarter does not negatively impact its A- (Excellent) financial strength rating.

In A.M. Best’s opinion, the pending class-action settlement, physician business practice commitments and health care foundation development are vital milestones in Aetna’s financial and strategic turnaround.

To date, the progress in Aetna’s financial and strategic turnaround has been better than expected, generating stronger financial returns, reestablishing the company’s credibility in the marketplace, focusing on positive health care delivery system change and improving relationships with the physician community.

A.M. Best will continue to evaluate Aetna’s ongoing turnaround effort and the impact that significant developments have on its financial strength rating.

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