Aetna (AET) Sees FY11 EPS Exceeding Previous Expectations; Updates on FY12 Outlook

For the balance of September, 2011, Aetna Inc. (NYSE: AET) expects to participate in presentations and meetings with investors and analysts, including a presentation by Joseph M. Zubretsky, Senior Executive Vice President and Chief Financial Officer of Aetna, at the Morgan Stanley Global Healthcare Conference in New York, New York that is scheduled for September 13, 2011. During the presentation and these meetings, Aetna intends to disclose that:

• based on actual results for July and August 2011, medical utilization to date continues to be lower than our previous expectations, resulting in better than projected underwriting margin, manifesting itself as favorable development of current year health care cost estimates;
  
  
• we continue to monitor the environment and our experience for indications of an uptick in utilization;
  
  
• from June 30, 2011 through September 12, 2011, Aetna repurchased approximately 9.3 million shares at a cost of approximately $350 million;
  
  
• based on our strong third quarter 2011 performance to date, we now project that our full-year 2011 reported operating results will exceed our previously disclosed full-year 2011 operating earnings per share guidance of $4.60 to $4.70 (1); and
  
  
• on our third quarter 2011 earnings conference call, we will update our full-year 2011 guidance metrics and provide details on the charge we expect to take during the third quarter of 2011 related to our pending Voluntary Early Retirement Program (which will be excluded from operating earnings).

Additionally, during the presentation and these meetings, Aetna expects to discuss the following challenges and opportunities that Aetna projects for 2012. Aetna's projected 2012 challenges include:

• favorable prior year reserve development of approximately $197 million, pre-tax, reported through the second quarter of 2011, which we do not, as a matter of course, project to recur;
  
  
• lower Commercial administrative services contract membership in large accounts in the first quarter of 2012 compared to year end 2011;
  
  
• low economic growth contributing to lower in-group medical membership growth; and
  
  
• lower net investment income than we project in 2011, due to the continuing impact of a low interest rate environment.

Aetna's projected 2012 opportunities include:

• projected growth in our Medicare and large-group commercial risk businesses, which will partially offset the projected Commercial administrative services contract membership losses;
  
  
• the continuing, positive impact of share repurchases on our earnings per share;
  
  
• the projected accretive impacts on earnings per share of our agreement with CVS Caremark Corporation and our recent acquisitions; and
  
  
• continued expense management, including the initial reduction in expenses resulting from our pending Voluntary Early Retirement Program, which will help to offset the negative expense leverage from projected membership losses.

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