2. Table of Contents
Letter to Shareholders 2
Tribute to John W. Rowe, M.D. 7
Making a Difference 9
Financial and Corporate Information 18
Plans and Products 26
Commitment to Social Responsibility 27
Key 2006 Awards and Recognitions 28
Personal Health Record CD Inside Back Cover
3. Financial Highlights
(Millions, except per common share data)
20051
FoR The YeAR 2006 % ChAnge
Revenue $5,145.7 $,491.9 11.8
Operating Expenses 4,77.5 4,45.7 6.
Operating Earnings3 1,635.9 1,349.8 1.
Net Income4 1,701.7 1,573.3 8.
Pretax Operating Margin5 10.9% 10.% 6.9
AT YeAR enD
Assets $47,66.4 $44,433.3 7.
Shareholders’ Equity 9,145.1 10,188.7 (10.)
Market Capitalization ,80.3 6,71.1 (16.6)
Common Shares Outstanding 516.0 566.5 (8.9)
PeR CoMMon ShARe
Operating Earnings3 $.87 $.3 8.7
Income4
Net .99 .60 15.0
1 Effective January 1, 006, we adopted FAS 13R applying the modified retrospective approach. Accordingly, financial information for 005 has been adjusted
to reflect our stock-based compensation activity. Additionally, results per common share for 005 have been adjusted to reflect the February 17, 006
two-for-one stock split.
Operating expenses excludes the write-off of a $7 million ($47 million after tax) insurance recoverable related to a prior-year class action settlement, a debt
refinancing charge of $1 million ($8 million after tax) associated with our 006 debt refinancing and an impairment of $8 million ($6 million after tax) of
previously capitalized software due to acquisition of a more multifunctional system in our 006 acquisition of Broadspire Disability.
3 Operating earnings excludes from net income: net realized capital gains of $4 million ($3 million pretax) in 006 and $1 million ($3 million pretax) in
005, favorable prior-period reserve development of $1 million ($18 million pretax) in 006 and $159 million ($50 million pretax) in 005, a reduction of
the reserve for anticipated future losses on discontinued products of $75 million ($115 million pretax) in 006 and $43 million ($67 million pretax) in 005.
For 006, operating earnings also exclude the items discussed in Note above on an after-tax basis.
4 For 006, net income includes income from discontinued operations of $16 million related to the receipt of a final refund amount from the completion
of certain Internal Revenue Service audits associated with businesses previously sold by our former parent company.
5 Pretax operating margin (GAAP basis) was 10.3% in 006 and 10.9% in 005. Pretax operating margin excludes favorable prior-period reserve development,
net realized capital gains, other items discussed in Notes and 3 above, amortization of other acquired intangible assets and interest expense.
The foregoing financial information should be read in conjunction with the financial statements and related notes as presented in Aetna Inc.’s 006 Annual
Report, Financial Report to Shareholders.
1
4. We are proud of what the company stands for —
employee engagement, integrity, quality service
and value, excellence and accountability.
The credo Aetna employees
live by every day is “put
the people who use our
services at the center of
everything we do.” That
is The Aetna Way.
Ronald A. Williams
Chairman, Ceo and President
5. Aetna’s drive for industry leadership
began with a clear purpose: to have a
positive impact on health care in America.
Our country’s annual health care expenditures are greater than any other country, still there are wide variations
in access and quality; certain populations receive better care than others; and all Americans do not have health care
coverage. Aetna has set out to offer real solutions in the marketplace.
Why should someone choose Aetna over another health plan, and how are we using our position to make a positive
difference in the nation’s health care system? I hope this year’s annual report will give you a sense of that. Throughout the
report, you’ll learn exactly what Aetna is doing to make a difference for the people who use our services, grow our business
and add value for our shareholders.
We also bid farewell to a valued colleague and a good friend: Jack Rowe. Jack retired as Aetna Chairman in 2006. It is
a great honor for me to succeed such an outstanding leader. Jack not only focused on making Aetna’s business better,
he focused on changing the course of an entire industry and building a better health care system. I am proud to enhance
and move forward our shared vision.
Customer focus driving strong results
The credo Aetna employees live by every day is “put the people who use our services at the center of everything we do.”
That is The Aetna Way. We innovate for customers by creating new products, introducing new decision support tools
and advancing important public policy issues.
That commitment has attracted new customers and strengthened relationships with existing customers, and resulted in
strong, profitable growth over the past several years. 2006 was no exception.
Some of Aetna’s 2006 financial highlights:
Full-year operating earnings per share, excluding reserve development, totaled $2.87 per share, an increase of
n
29 percent over 2005.
Total revenues expanded by 12 percent.
n
Net income for 2006 was $2.99 per share, an increase of 15 percent, and included capital gains and other items.
n
For 2006, we deployed a total of $2.5 billion of capital.
n
We grew in all of our product areas. For example, our medical membership grew by 678,000 to 15.4 million members
as a result of broadening into new geographic areas and customer markets. Meanwhile, we maintained our pricing
discipline, saw solid underwriting results and made significant progress on operating efficiencies.
In addition, we deployed capital to create value for customers and shareholders. The acquisition of Broadspire’s disability
services business boosted our ability to integrate medical and disability coverage for our customers, and contributed to
new sales opportunities. In 2006, we also repurchased 60.3 million shares for a total of more than $2.3 billion.
3
6. giving different customers unique reasons to choose Aetna
Customer market segmentation has been core to profitably growing our membership. We work hard to understand the
broad customer groups we serve – from large national, midsize or small businesses, to retirees, to individuals – then
consider distinct features that customers within each of those groups want and create targeted solutions.
For example, affordability and simplicity are important to small business owners. However, a small woman-owned
or service company might have different needs we consider when offering benefits. The uninsured population also has
distinct segments of individuals with very different needs. College students, for example, may need one kind of health
care coverage, while part-time workers or someone in between jobs may need another.
The key to our growth has been to implement a strategy that results in giving different customers very unique reasons to
choose Aetna, including providing value for their money.
engaging consumers with new decision support tools
Aetna saw the We also have used information and technology to engage all of our members, in
concert with their physicians, to help them achieve optimal health. While many
opportunity to industries use technology as a fundamental driver to improve quality and reduce
improve outcomes costs, health care historically has lagged behind. Several years ago, Aetna saw the
opportunity to improve outcomes by applying its technology and analytical
by applying capabilities, and we have continued to invest in this area.
technology and For example, in 2006 we continued to expand our online transparency initiative.
We believe people can be better consumers of health care if they know more
analytical about the quality and cost of the care. Aetna’s Personal Health Record (PHR)
is another new tool we are excited about. You can find a demo CD at the back
capabilities. of this report. We are taking all of the data we have about members – including
lab results, diagnostic tests, prescriptions filled – and making it accessible in a
member’s personal and portable health record.
Aetna’s PHR is powered by CareEngine®, the proprietary technology of our ActiveHealth Management subsidiary.
CareEngine analyzes the claims data Aetna has for a member, scans for variations in standards of care, and shares that
information with physicians and members.
Integrating capabilities to improve quality and cost
CareEngine technology also powers Aetna Health ConnectionsSM, our next generation of medical management. In the
industry, a silo approach to medical management is common. A member’s diabetes condition, for example, is managed
through one program and pharmacy needs through another.
Aetna Health Connections integrates our capabilities across all plans – medical, pharmacy, behavioral health, dental and
disability – and some 30 conditions. Aetna members benefit from this holistic approach. For example, when Aetna’s medical
and pharmacy plans are integrated, we identify 25 percent more people with serious chronic conditions; and we find them
more than one month earlier, which means members can benefit sooner from programs to help them achieve optimal health.
4
7. Aetna has successfully advanced
public policy because we offer
targeted solutions.
Aetna Health Connections also gives us the capability to apply our medical management capability to 50 percent of the
cost of health care; historically, it has been about 37 percent. That incremental expansion is helping Aetna become even
more competitive in managing costs, while improving quality, for customers.
Advancing thought leadership
While we have been busy innovating on behalf of our customers, we also have shared our expertise to help shape public
policy on important issues. For example, we were the first to call for an individual coverage requirement as a step toward
universal health coverage. This is now part of many state proposals, as well as part of the national health care dialogue.
We also were called upon to share our consumer-directed health care experience; that included working with regulators to
make Health Savings Accounts more flexible. By the way, you can find the results of our four-year Aetna HealthFund® study
on www.aetna.com. It is the most comprehensive study of its kind on the effectiveness of consumer-directed health plans.
More recently, Aetna was one of the first Fortune 100 employers – and the first health plan – to endorse the Department of
Health and Human Services’ “Four Cornerstones of Value-Driven Health Care.” We strongly support the ideas of using health
information technology, and providing quality and pricing information to promote the quality and efficiency of health care.
Aetna has successfully advanced public policy because we offer targeted solutions. For example, to serve different needs
within the uninsured population, there is our Chickering student health insurance and Strategic Resource Company for
part-time workers; as well as Aetna HealthFund products, which appeal not only to national employers, but small business
owners and individuals. Across Aetna’s various market segments, an average of 11 percent of our members reported having
been uninsured prior to enrolling in their Aetna health plans.
Looking forward to our bright future
Aetna is determined to be the company with which members, employers, health care professionals, brokers and consultants,
and shareholders prefer to do business. We have the building blocks to attract new customers, such as our broad portfolio of
products, best-in-class capabilities to improve health care quality and cost, and robust information and decision support tools.
Going forward, our priorities are to seek new customer market segments, new geographies, new distribution channels,
new lines of business, and new opportunities where business and public policy efforts can converge. Success will come by
being the first to market with innovative new products, giving great service for customers, supporting physicians to help
members achieve optimal health, and working with others to help all Americans access quality and affordable coverage.
More than 30,000 Aetna employees are working hard on behalf of our members, customers and shareholders. We are proud
of what the company stands for – employee engagement, integrity, quality service and value, excellence and accountability.
I hope you are as excited about Aetna’s future as I am. When we look back at 2007, I am confident we will be able to say we
made a difference for millions of people and enhanced the value of our company. Thank you for your investment in Aetna.
Ronald A. Williams, Chairman, CEO and President
5
9. Thank you
John W. Rowe, M.D.
In 006, we marked the seamless Jack challenged Aetna, our Jack articulated the business
transition of senior management employees and stakeholders in case for quality in health care,
with the departure of Jack Rowe other ways. He brought a unique spearheading our efforts to create
Aetna’s Aexcel® network to provide
as Chairman and Chief Executive focus on changing the culture of
Officer. It is especially fitting to the company centered on “The access to cost-effective, quality
offer Jack the appreciation of Aetna Way,” with a clear mission care in high-cost specialties.
Aetna shareholders and employees based on a core set of deeply held
Jack also understood the
in an annual report entitled values. These values distinguish
importance of creating partnerships
“Making a Difference.” He did. the company and are a continuing
and seeking areas of agreement.
source of pride.
During his six-year tenure, Jack was He was responsible for articulating
instrumental at Aetna in charting a His vision for the future included the view that Aetna would be more
course for success and profitability. challenging us to consider the ways successful as a company working
By any measure – solid financial in which we could be a positive in partnership with doctors;
performance, our broad-based force for change in health care. understanding that working
membership growth, or by Jack began our “Chairman’s together, we could be a potent
focusing on the need to innovate Initiatives” as a tangible way of force for change in health care.
on behalf of customers – Aetna has making a difference. His leadership
We offer Jack our thanks for his
been successful. Jack organized the in areas such as addressing racial
leadership and our appreciation
company for success, building a and ethnic disparities, care at the
for his inspired view of what
talented management team and end of life, depression, and the
Aetna could be.
setting out a strategy centered importance of genetic testing were
on going “back to basics.” The inspiring; and meant to focus on
success that we enjoyed in 006 areas often ignored by others, but
was rooted in the execution of this where we as a company could
strategy by a committed group of have a unique impact.
30,000 employees.
7
13. Improving the quality of care
and the way it is delivered
health care quality in America which our proprietary ActiveHealth which incorporates recognized
CareEngine® enables us to
is a significant issue. Medical measures for clinical effectiveness
errors result in as many as continuously scan 100 percent of and efficiency, and builds on
100,000 deaths each year. only our disease management members’ existing market-based Aetna
49 percent of adults receive data to identify opportunities to programs.
recommended preventive work with their treating physicians
Offered expanded opportunities
n
care and screening tests. on addressing clinical gaps and
to integrate medical, disability,
improve compliance with best-
Aetna is employing new dental and pharmacy data;
practice guidelines.
technologies, new approaches to helping to improve members’
medical management and a new overall health, and reduce
In the past year, Aetna also:
way of working with physicians to medical care costs and the costs
make a difference in health care related to chronic care conditions.
Forged innovative relationships to
n
quality. We’re developing solutions For example, our integrated
tackle health care quality and cost
to help Americans, working with health and disability program
issues in new ways. Aetna, for
their physicians, achieve their potentially reduces short-term
example, teamed up with Virginia
optimal health. disability durations by as much as
Mason Medical Center and several
10.7 percent. Our acquisition in
Seattle-area employers in 006
006 of Broadspire’s disability
to develop a model of health care
business broadened our integrated
delivery that rewards health care
We’re developing health and disability capabilities.
professionals for quality, cost-
solutions to help efficient care, rather than just
Americans, working quantity of care. Aetna also is
$2.9 million
working with other medical
with their physicians, groups on ways to adapt and
achieve their implement this novel approach.
For community initiatives
optimal health. Expanded the availability of our in 2006 that target
n
Aexcel® performance network depression, childhood
to markets in 18 states and
obesity, diabetes and oral
Through Aetna Health Washington, D.C.; addressing the
health, and end-of-life care.
ConnectionsSM, our innovative needs of consumers who have
approach to medical management, little access to independent,
we are using information objective information when they
technology to communicate clinical Through the Aetna Foundation,
choose specialists. Aexcel- n
issues and help motivate members a total of $.9 million was
designated specialists meet
to take an active role in their awarded in 006 for community
certain thresholds for clinical
health. Our disease management initiatives that target depression,
performance and cost efficiency.
focus has been expanded to more childhood obesity, diabetes and
Further developed our national
n
than 30 chronic conditions, in oral health, and end-of-life care.
pay-for-performance program;
11
15. Creating a higher level of
consumer engagement
The U.S. spends 75 percent members with online access to Met health benefits literacy
n
of its health care dollars on personal information, including challenges by teaming up with
conditions related to unhealthful individual personalized messages the Financial Planning Association
lifestyles. Poor health literacy and alerts, detailed health history, to produce a free guide that
is costing Americans $32 billion- and integrated information and simply and clearly helps consumers
$58 billion each year. Yet, resources. With its interactive learn how to navigate their health
93 percent would be comfortable functions allowing consumers benefits. The 64-page guide,
taking on more responsibility Navigating Your Health Benefits
the opportunity to add personal
For Dummies®, has helped
for health decisions. information about their health
history, Personal Health Record will over 100,000 Americans learn
Aetna has embraced consumerism
help consumers be more informed more about current and future
in health care, with the goal of
and engaged. The initiative is health needs.
creating a true marketplace for
powered by ActiveHealth’s
consumers as health care decision
CareEngine®, which continuously
makers. We are helping Americans
scans our members’ disease
$1 million
be more health care literate and
management health information
engaged in health care decisions
to identify opportunities to
The amount consumer-
through access to a wealth of
improve care.
online tools and information on directed health care plans
www.aetna.com that BusinessWeek
saved per 1,000 members
In the past year, Aetna also:
described as the “richest set of
over a three-year period.
offerings” among three major Expanded our industry-leading
n
health plans. price and quality transparency
initiatives, giving consumers
Enhanced our suite of consumer-
greater access, via our secure n
directed health care products.
Tools and information member website, to physician
Our broadest study to date of
quality and price information;
on www.aetna.com 1.6 million members in employer
and making more informed
that BusinessWeek groups that offer Aetna HealthFund®
health care decisions possible.
plans shows that they maintained
In selected markets, our members
described as the or improved levels of chronic and
have the ability to research
“richest set of offerings.” preventive care; and increased
physician-specific pricing, clinical
use of generic medications, and
quality and efficiency information
BusinessWeek
consumer tools and information.
before seeing their doctors –
February 20, 2006
Aetna consumer-directed health
an industry first.
care plans, offered as a full
replacement, also saved
Making health care history in 006,
$1 million per 1,000 members
Aetna announced Personal Health
over a three-year period.
Record, an initiative that provides
13
17. Increasing the affordability and
access of health care coverage
More than 46 million Americans potentially cover tens of
are uninsured: 80 percent thousands of state residents who
Helping to make
belong to working families, currently have no health insurance.
coverage easier to
52 percent are minorities and
Expanded access to health care
n
attain for populations
10 percent are college students,
by continuing to grow our
14.1 percent have annual
struggling to find networks of more than 774,000
incomes of $50,000 to $74,000,
health care professionals and
affordable health care.
and another 8.5 percent have
4,485 hospitals. In 006, we saw
incomes of $74,000 or more.
a 9.1 percent growth in our PPO
The uninsured come from all network. One example was the
In the past year, Aetna also:
walks of life. Consequently, Aetna
is focusing on these discrete Advocated for an individual
n
populations, understanding their coverage requirement, which
774,000*
needs and building capabilities to became law in Massachusetts and
better serve them – through the now is featured in at least eight
Health care professionals
development of more affordable of the 5-plus states debating
in our network
products and by working to comprehensive reform. It is one
achieve broad policy solutions. of the most effective tools
4,485*
available for expanding access
Our expanding Aetna HealthFund®
to health care and helping to
Hospitals in our network
family of consumer-directed health
provide assistance to those who
plans, our student plans made
cannot afford coverage. The first
available through our Chickering
national insurer to call for an
subsidiary, and coverage for hourly
individual coverage requirement significant expansion of our
and part-time workers available
in 005, Aetna actively supports network in Michigan and
through our Strategic Resource
legislation based on this Colorado due to the acquisition
Company subsidiary are all helping
common-sense solution. of HMS Healthcare in 005.
to make coverage easier to attain
In January 007, the AFL-CIO
for populations struggling to find In September, expanded access to
n
Employer Purchasing Coalition
affordable health care coverage. quality health coverage through
selected Aetna’s PPOM for its
An industry study found that as participation in CHIP (Children’s
health network lease offering.
of March 005, 37 percent of Health Insurance Program) and
556,000 individual purchasers of Medicaid in the Tarrant and Bexar
health plans with Health Savings service areas of Texas. The plans
Accounts were previously uninsured. offer greater choice to the more
than 330,000 Texas residents in
these areas who are eligible for
CHIP or Medicaid and could
*As of December 1, 006
15
19. Influencing public policy
Sixty-three percent of Worked on development of a set
n
Americans support modifying of standards for personal health
Worked with the
the current system rather records that would bring greater
White House and
than replacing it with a uniformity and efficiency to the
Congress to help
government-run system. health care system by enabling,
for example, consumers to take
reform the health
Aetna has worked diligently at
their personal health records with
the state and federal levels with
care system. them from employer to employer.
legislators and regulators to educate
and encourage reforms that will
help make the health care system and an Aetna representative
$50 million
more uniformly effective. Aetna testified before a Congressional
also funds many community-based Subcommittee on Health in July
Aetna’s commitment
health care programs that are 006 about price and quality
reaching those who don’t always transparency in health care. over the next four years
benefit from health care services. Aetna also played a major role in
to support the growth
helping members of Congress
of minority- and women-
In 006, Aetna became the first
focus on and adopt a set of
owned businesses.
national insurer to commit to the
regulatory “fixes” for Health
federal Department of Health and
Savings Accounts (HSAs) such
Human Services’ Four Cornerstones
as an expansion of the amounts
of Value-Driven Health Care: build
that can be put in HSAs. Committed more than
n
a better health care system by
$5.7 million in 006 to help
supporting health information Played a key role in advocating
n
address racial and ethnic
technology, provide quality for expanded access to generic
disparities in health care in
information, provide pricing drugs, a critical component to
communities across much of the
information, and promote reducing health care costs overall
country, and we announced a
quality and efficiency of care. and improving consumer access
$50 million commitment over
to life-altering therapies. Aetna
the next four years to support
continues to push for legislation
In the past year, Aetna also: the growth of minority- and
to help speed generics to the
women-owned businesses.
Worked with the White House
n
marketplace. Aetna also is
and Congress to help reform helping to lead the way toward
the health care system. Aetna establishment of a uniform
Chairman, CEO and President national set of rules and
Ronald A. Williams was part of guidelines for providing parity
an industry group that met with between mental health benefits
President Bush in February 006 and medical benefits.
to discuss health care reforms,
17
20. Financial and Corporate Information
Consolidated Statements of Income 19
Consolidated Balance Sheets 20
Consolidated Statements of Cash Flows 21
Board of Directors and Executive Committee 22
Shareholder Information 24
18
21. Consolidated Statements of Income
For the Years ended December 31,
20051 20041
(MILLIonS, exCePT PeR CoMMon ShARe DATA) 2006
Revenue:
Health care premiums $19,153.5 $16,94.7 $14,86.8
Other premiums 1,956.0 ,003.0 1,813.9
Fees and other revenue ,839.3 ,48.9 ,094.1
Net investment income 1,164.7 1,103.0 1,06.5
Net realized capital gains 3. 3.3 70.8
Total revenue 25,145.7 22,491.9 19,904.1
Benefits and expenses:
Health care costs 15,301.0 13,107.9 11,637.7
Current and future benefits ,319.0 ,364.5 ,191.5
Operating expenses:
Selling expenses 95.7 843.5 700.0
General and administrative expenses 3,867.9 3,609. 3,467.7
Total operating expenses 4,80.6 4,45.7 4,167.7
Interest expense 148.3 1.8 104.7
Amortization of other acquired intangible assets 85.6 57.4 4.5
Reduction of reserve for anticipated future losses on discontinued products (115.4) (66.7) –
Total benefits and expenses 22,559.1 20,038.6 18,144.1
Income from continuing operations before income taxes ,586.6 ,453.3 1,760.0
Income taxes 901.0 880.0 635.
Income from continuing operations 1,685.6 1,573.3 1,14.8
Discontinued operations, net of tax 16.1 – 1,030.0
net income $ 1,701.7 $ 1,573.3 $ 2,154.8
earnings per common share:
Basic:
Income from continuing operations $ 3.09 $ .7 $ 1.86
Discontinued operations, net of tax .03 – 1.70
net income $ 3.12 $ 2.72 $ 3.56
Diluted:
Income from continuing operations $ .96 $ .60 $ 1.79
Discontinued operations, net of tax .03 – 1.64
net income $ 2.99 $ 2.60 $ 3.43
1 Effective
January 1, 006, we adopted FAS 13R applying the modified retrospective approach. Accordingly, financial information for 005 and 004 have
been adjusted to reflect our stock-based compensation activity. Additionally, results per common share for 005 and 004 have been adjusted to reflect the
February 17, 006 two-for-one stock split.
The foregoing financial information should be read in conjunction with the financial statements and related notes as presented in Aetna Inc.’s 006 Annual Report,
Financial Report to Shareholders.
19
22. Consolidated Balance Sheets
As of December 31,
20051
(MILLIonS) 2006
Assets
Current assets:
Cash and cash equivalents $ 880.0 $ 1,19.6
Investment securities 13,437. 13,366.
Other investments 10.4 96.8
Premiums receivable, net 363.1 349.
Other receivables, net 530.1 366.7
Accrued investment income 183.1 184.9
Collateral received under securities loan agreements 1,054.3 1,138.8
Loaned securities 1,018.1 1,115.7
Deferred income taxes 10.8 –
Other current assets 506.7 43.8
Total current assets 18,303.8 18,234.7
Long-term investments 1,840.6 1,869.3
Mortgage loans 1,380.8 1,460.8
Reinsurance recoverables 1,107.4 1,143.7
Goodwill 4,603.6 4,53.
Other acquired intangible assets, net 691.6 74.9
Property and equipment, net 83.6 7.8
Deferred income taxes 34.4 68.7
Other long-term assets 868.7 1,60.8
Separate Accounts assets 18,03.9 14,53.4
Total assets $47,626.4 $44,433.3
Liabilities and shareholders’ equity
Current liabilities:
Health care costs payable $ 1,97.5 $ 1,817.0
Future policy benefits 786.0 806.1
Unpaid claims 598.3 58.5
Unearned premiums 185.6 156.9
Policyholders’ funds 567.6 757.7
Collateral payable under securities loan agreements 1,054.3 1,138.8
Short-term debt 45.0 –
Current portion of long-term debt – 450.0
Income taxes payable 4.6 36.7
Deferred income taxes – 10.4
Accrued expenses and other current liabilities 1,896.1 1,860.7
Total current liabilities 7,103.0 7,616.8
Future policy benefits 7,463.7 7,64.1
Unpaid claims 1,174.6 1,144.9
Policyholders’ funds 1,96.4 1,304.
Long-term debt, less current portion ,44.3 1,155.7
Other long-term liabilities 797.4 848.5
Separate Accounts liabilities 18,03.9 14,53.4
Total liabilities 38,481.3 34,244.6
Shareholders’ equity:
Common stock and additional paid-in capital ($.01 par value, .8 billion shares authorized, 516.0 million shares
issued and outstanding in 006; 1.4 billion shares authorized, 566.5 million shares issued and outstanding in 005) 366. ,414.7
Retained earnings 9,404.6 7,73.7
Accumulated other comprehensive (loss) income (65.7) 50.3
Total shareholders’ equity 9,145.1 10,188.7
Total liabilities and shareholders’ equity $47,626.4 $44,433.3
1 EffectiveJanuary 1, 006, we adopted FAS 13R applying the modified retrospective approach. Accordingly, financial information for 005 has been adjusted
to reflect our stock-based compensation activity.
The foregoing financial information should be read in conjunction with the financial statements and related notes as presented in Aetna Inc.’s 006 Annual
Report, Financial Report to Shareholders.
0
23. Consolidated Statements of Cash Flows
For the Years ended December 31,
20051 20041
(MILLIonS) 2006
Cash flows from operating activities:
Net income $ 1,701.7 $ 1,573.3 $ ,154.8
Adjustments to reconcile net income to net cash provided by operating activities:
Discontinued operations (16.1) – (1,030.0)
Physician class action settlement insurance-related charge 7.4 – –
Depreciation and amortization 70.4 04.4 18.
Amortization of net investment premium 18.7 .6 45.5
Equity in earnings of affiliates, net (10.) (44.) (3.)
Stock-based compensation expense 73.7 94.1 138.9
Net realized capital gains (3.) (3.3) (70.8)
Changes in assets and liabilities:
Accrued investment income 1.8 13.7 .9
Premiums due and other receivables (61.) (95.6) 34.0
Income taxes 9.9 390.5 149.4
Other assets and other liabilities (05.7) (51.6) (61.7)
Health care and insurance liabilities (106.1) (3.7) (366.3)
Other, net (6.5) .3 .0
Net cash provided by operating activities of continuing operations 1,638.6 1,651.5 617.7
Discontinued operations 49.7 68.8 666.
net cash provided by operating activities 1,688.3 1,720.3 1,283.9
Cash flows from investing activities:
Proceeds from sales and investment maturities of:
Debt securities available for sale 10,380.1 10,604.7 9,471.7
Other investments 1,457.5 1,30.9 ,495.9
Cost of investments in:
Debt securities available for sale (10,678.6) (10,108.5) (9,469.3)
Other investments (1,60.9) (1,130.0) (,31.1)
Increase in property, equipment and software (90.5) (71.6) (190.3)
Cash used for acquisitions, net of cash acquired (160.9) (1,107.6) (9.5)
net cash (used for) provided by investing activities (553.3) (710.1) 67.4
Cash flows from financing activities:
Net issuance of short-term debt 45.0 – –
Proceeds from issuance of long-term debt, net of issuance costs 1,978.9 – –
Repayment of long-term debt (1,150.0) – –
Deposits and interest credited for investment contracts 8. 41.6 54.5
Withdrawals of investment contracts (11.8) (54.5) (43.)
Common shares issued under benefit plans 115.8 71.3 316.0
Stock-based compensation tax benefits 89.6 173.1 15.9
Common shares repurchased (,3.5) (1,650.0) (1,493.0)
Dividends paid to shareholders (0.8) (11.4) (5.9)
Other, net – 16.3 10.0
net cash used for financing activities (1,447.6) (1,213.6) (1,388.7)
Net decrease in cash and cash equivalents (31.6) (03.4) (37.4)
Cash and cash equivalents, beginning of period 1,19.6 1,396.0 1,433.4
Cash and cash equivalents, end of period $ 880.0 $ 1,192.6 $ 1,396.0
1 Effective
January 1, 006, we adopted FAS 13R applying the modified retrospective approach. Accordingly, financial information for 005 and 004 have
been adjusted to reflect our stock-based compensation activity.
The foregoing financial information should be read in conjunction with the financial statements and related notes as presented in Aetna Inc.’s 006 Annual
Report, Financial Report to Shareholders.
1
24. Board of Directors and Executive Committee
Board of Directors Molly J. Coye, M.D. Jeffrey e. garten
Chief Executive Officer Juan Trippe Professor in the
Frank M. Clark
Practice of International Trade,
Health Technology Center
Chairman and
Finance and Business
Chief Executive Officer Barbara hackman Franklin Yale University
Commonwealth Edison Company
President and
Chairman
Chief Executive Officer
Betsy Z. Cohen Garten Rothkopf
Barbara Franklin Enterprises
Chairman
earl g. graves
Former U.S. Secretary of Commerce
RAIT Financial Trust
Chairman
Chief Executive Officer
Earl G. Graves, Ltd.
The Bancorp, Inc.
Publisher
Black Enterprise magazine
25. executive Committee
gerald greenwald James K. Foreman
Founding Principal Executive Vice President
Ronald A. Williams
National Businesses
Greenbriar Equity Group
Chairman, Chief Executive
Retired Chairman and Officer and President Timothy A. holt
Chief Executive Officer
Senior Vice President,
Alan M. Bennett**
UAL Corporation
Chief Investment Officer and
Senior Vice President and
Chief Enterprise Risk Officer
ellen M. hancock Chief Financial Officer
President and
Margaret M. McCarthy
Mark T. Bertolini
Chief Operating Officer
Senior Vice President and
Jazz Technologies, Inc. Executive Vice President
Chief Information Officer
Regional Businesses
Michael h. Jordan*
Robert M. Mead
Troyen A. Brennan, M.D.,
Chairman and
Senior Vice President
M.P.h.
Chief Executive Officer
Strategic Marketing
Senior Vice President and
Electronic Data Systems
and Communications
Chief Medical Officer
Corporation
elease e. Wright
Craig R. Callen
edward J. Ludwig
Senior Vice President
Senior Vice President
Chairman of the Board, President
Human Resources
Strategic Planning and
and Chief Executive Officer
Business Development
Becton, Dickinson and Company Joseph M. Zubretsky**
Executive Vice President
William J. Casazza
Joseph P. newhouse
Finance
Senior Vice President and
John D. MacArthur Professor of
General Counsel
Health Policy and Management
Corporate Secretary
Harvard University
Christopher M. Todoroff
Ronald A. Williams
Vice President,
Chairman, Chief Executive
Corporate Secretary and
Officer and President
Senior Corporate Counsel
Aetna Inc.
**Mr. Jordan will not stand for re-election at the 007 annual meeting of shareholders and will retire from the Board at that time.
**Mr. Bennett is scheduled to retire from Aetna on April 7, 007, at which time Mr. Zubretsky will assume the role of Chief Financial Officer.
Opposite page, Board of Directors (left to right): Molly J. Coye, M.D.; Gerald Greenwald; Betsy Z. Cohen; Edward J. Ludwig; Jeffrey E. Garten; Earl G. Graves;
Ronald A. Williams; Michael H. Jordan; Barbara Hackman Franklin; Frank M. Clark; Ellen M. Hancock; Joseph P. Newhouse.
3
26. Shareholder Information
Annual Meeting print to shareholders free of
through its website the Company’s
charge by calling 1-800-237-4273.
Annual Report, Financial Report to
The annual meeting of shareholders
Shareholders and Proxy Statement.
of Aetna Inc. (“Aetna” or the Section 16 reports are filed with the
Shareholders may request printed
“Company”) will be held on Friday, SEC by Aetna’s Directors and those
copies of these reports free of
April 27, 2007, at The Gaylord officers subject to Section 16 to
charge by calling 1-800-237-4273.
Texan Resort and Convention reflect a change in their beneficial
Center in Grapevine, Texas. Aetna’s Annual Report on Form ownership of Aetna’s securities and
10-K provides additional details are available through Aetna’s
Corporate headquarters website at www.aetna.com.
about the Company’s business, as
well as other financial information
151 Farmington Avenue
The Audit Committee of the Board
not included in this Annual Report.
Hartford, CT 06156
of Directors can be confidentially
To receive a copy of the Annual
Phone: 860-73-013
contacted by those wishing to raise
Report on Form 10-K without charge,
concerns or complaints about the
Stock exchange Listing please follow the above instructions.
Company’s accounting, internal
Aetna’s common shares are listed Also available on Aetna’s website accounting controls or auditing
on the New York Stock Exchange matters by calling AlertLine®, an
at www.aetna.com/governance
(“NYSE”). The NYSE symbol for are the following Aetna corporate independent toll-free service, at
the common shares is AET. As of governance materials: Articles of 1-888-891-8910 (available seven
January 31, 007, there were Incorporation and By-Laws; Code days a week, 4 hours a day), or
11,16 record holders of Aetna’s of Conduct for Directors, officers by writing to:
common shares. and employees (and information
Corporate Compliance
regarding any amendments or
P.O. Box 37005
Website Access to Aetna’s waivers relating to Aetna’s Directors,
West Hartford, CT 06137-005
Periodic and Current Reports executive officers and principal
and Corporate governance financial and accounting officers Anyone wishing to make their
Materials or persons performing similar concerns known to Aetna’s
functions); Independence Standards
Aetna makes available free of nonmanagement Directors or to
for Directors; Corporate Governance
charge through its website at send a communication to the entire
Guidelines; Board of Directors; and
www.aetna.com its Annual Board of Directors may contact
Charters for the key standing
Reports on Form 10-K, Quarterly Michael H. Jordan, who will serve
Committees of the Board of
Reports on Form 10-Q, Current as Aetna’s Presiding Director until
Directors (Audit Committee,
Reports on Form 8-K and all April 7, 007; or Gerald Greenwald,
Committee on Compensation and
amendments to those reports as who will serve as Aetna’s Presiding
Organization, Executive Committee,
soon as reasonably practicable after Director after that date; by writing
Investment and Finance Committee,
Aetna electronically files or furnishes to the Presiding Director at P.O. Box
Medical Affairs Committee, and
such materials with the U.S. 37005, West Hartford, CT 06137-
Nominating and Corporate
Securities and Exchange 005. All communications will be
Governance Committee). These
Commission (the “SEC”). Aetna kept confidential and forwarded
materials also are available in
also makes available free of charge directly to the Presiding Director or
4
27. Investor Relations
Board, as applicable. Aetna’s can click “Register Now” on the
Presiding Director, among other right side of the login page to set
Securities analysts and institutional
things, presides over both the up their access and passwords for
investors should contact:
nonmanagement Directors’ and the the first time.
David W. Entrekin
independent Directors’ sessions. To
New investors in the
Vice President
contact Ronald A. Williams, Chairman,
DirectSERVICE Investment Program:
Phone: 860-73-7830
Chief Executive Officer and President,
Click “buy stock direct” and search
Fax: 860-73-3971
you may write to Mr. Williams at
by ticker symbol “AET” to view or
E-mail address:
Aetna Inc., 151 Farmington Avenue,
EntrekinD@aetna.com print the plan materials and/or to
Hartford, CT 06156.
open a new shareholder account
Shareholder Services
Aetna mails quarterly financial completely online.
results only to those shareholders Computershare Trust Company, other shareholder inquiries
who request copies. Shareholders N.A. (“Computershare”), Aetna’s Office of the Corporate Secretary
may call 1-800-37-473 to listen transfer agent and registrar, Aetna Inc.
to the Company’s quarterly earnings maintains a telephone response 151 Farmington Avenue, RE4K
release and dividend information, center and a website to service Hartford, CT 06156-315
and to request faxed or mailed registered shareholder accounts. Phone: 860-73-4970
copies of the quarterly results. Registered shareholders may contact Fax: 860-93-1361
Computershare to inquire about E-mail address:
Certifications replacement dividend checks, ShareholderRelations@aetna.com
Ronald A. Williams, Chairman, Chief address changes, stock transfers
Executive Officer and President, and and other account matters. Aetna equity-Based grant
Alan M. Bennett, Chief Financial Participants and Aetna
DirectSeRVICe Investment
Officer, have provided unqualified employee Stock Purchase
Program
Certifications of the Company’s Plan Participants
Current shareholders and new
public disclosure contained in the
Employees with outstanding equity-
investors can purchase Aetna
Company’s Annual Report on
based grants (stock options, stock
common shares and reinvest cash
Form 10-K for the year ended
appreciation rights, restricted stock
dividends through this program
December 31, 006 (the “006
units) should address all questions
sponsored by Computershare.
Form 10-K”), filed with the SEC.
to UBS Financial Services, Inc.
These Certifications, which are Contacting Computershare
(“UBS”) regarding their accounts,
required pursuant to Section 30 by mail:
outstanding grants or shares
of the Sarbanes-Oxley Act of 00 Computershare
received through exercises,
and related regulations, are filed as P.O. Box 43069
restricted stock unit vesting or
exhibits to the 006 Form 10-K. Providence, RI 0940-3069
purchases through the Employee
In addition, NYSE regulations Stock Purchase Plan.
Contacting Computershare
require that the Chief Executive by telephone:
UBS Financial Services, Inc.
Officer provide the NYSE each year 1-800-446-617 – For general
Corporate Employee Financial
with a certification of compliance inquiries and dividend reinvestment
Services
with the NYSE’s corporate 1-800-870-340 – To enroll in
300 Lighting Way, 6th Floor
governance listing standards direct deposit of dividends
Secaucus, NJ 07094-367
following the annual shareholders
Phone: 1-888-793-7631
Contacting Computershare by
meeting. As required by these
(TTY for the hearing impaired:
Internet (instructions below):
regulations, in May 006, Mr. Williams
1-877-35-3595)
www.computershare.com/investor
provided the NYSE with an
Current registered shareholder Online Access
unqualified certification regarding
access: Click “account access” to www.ubs.com/onesource/aet
compliance with these standards.
log into your account. New users
5
