1. A Second Quarter 2008
Financial
Supplement

2. Table of Contents
Financial Highlights 1
Health Care and Group Insurance Statistics 2
Health Care Membership 3
Statements of Net Income (Loss) by Segment 4-5
Balance Sheets 6
Condensed Statements of Cash Flows 7-8
Roll Forward of Health Care Costs Payable 9
Reconciliations of Certain Reported Amounts to the Most Directly Comparable GAAP Measure 10-11
Footnotes, Definitions and Balance Sheet Terms 12
This document is supplemental to our second quarter 2008 earnings press release issued on July 31, 2008 and should be read in conjunction therewith and in conjunction with our
Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 when filed with the U.S. Securities and Exchange Commission. Please direct questions with respect to this material
to Jeffrey Chaffkin, Vice President, Investor Relations at 860-273-7830 or chaffkinj@aetna.com.

3. Financial Highlights
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
(Millions, except per common share data) 2008 2007 Change 2008 2007 Change
(1)
Operating Earnings
Aetna Inc. $ 466.3 $ 439.8 6.0 % $ 935.9 $ 875.2 6.9 %
Aetna Inc. per common share .94 .83 13.3 % 1.86 1.64 13.4 %
Health Care 453.9 420.0 8.1 % 915.5 842.7 8.6 %
Group Insurance 39.3 39.2 .3 % 74.2 70.3 5.5 %
Large Case Pensions 9.9 8.4 17.9 % 18.4 17.5 5.1 %
Net Income
Aetna Inc. 480.5 451.3 6.5 % 912.1 885.9 3.0 %
Aetna Inc. per common share .97 .85 14.1 % 1.82 1.66 9.6 %
Weighted average common shares - diluted 495.8 531.8 (6.8) % 502.4 534.1 (5.9) %
(1)
Operating Margin
Pretax Operating Margin 10.2 % 10.8 % (.6) pts. 10.2 % 10.8 % (.6) pts.
After-tax Operating Margin 6.6 % 7.0 % (.4) pts. 6.7 % 7.1 % (.4) pts.
(1)
Revenue by Segment
(2)
Health Care $ 7,185.7 $ 6,102.7 17.7 % $ 14,323.2 $ 12,071.8 18.7 %
Group Insurance 503.8 553.1 (8.9) % 1,016.3 1,097.2 (7.4) %
Large Case Pensions 160.7 184.7 (13.0) % 307.9 372.7 (17.4) %
Total Revenue $ 7,850.2 $ 6,840.5 14.8 % $ 15,647.4 $ 13,541.7 15.5 %
(1)
Operating Expenses as % of Revenue 17.8 % 17.8 % - pts. 17.9 % 17.9 % - pts.
June 30, March 31, December 31, September 30, June 30,
2008 2008 2007 2007 2007
Membership (Thousands)
Medical 17,499 17,467 16,853 16,613 15,767
Dental 14,106 14,166 13,832 13,694 13,185
Pharmacy 10,968 10,951 10,732 10,669 10,586
Days Claims Payable 43.9 44.4 44.2 46.3 45.4
Refer to page 12 for an explanation of footnotes and definitions of terms used.
1

4. Health Care and Group Insurance Statistics
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
(Millions) 2008 2007 Change 2008 2007 Change
Health Care
Premiums
Commercial $ 4,954.4 $ 4,597.6 7.8 % $ 9,837.8 $ 9,110.2 8.0 %
Medicare 1,194.3 677.8 76.2 % 2,421.8 1,329.2 82.2 %
Medicaid 140.2 17.4 * 282.8 31.9 *
(2)
Health Care $ 6,288.9 $ 5,292.8 18.8 % $ 12,542.4 $ 10,471.3 19.8 %
Health Care Costs
Commercial $ 3,990.1 $ 3,699.4 7.9 % $ 7,887.9 $ 7,290.4 8.2 %
Medicare 1,037.3 597.7 73.5 % 2,093.4 1,171.0 78.8 %
Medicaid 125.9 16.8 * 258.2 29.6 *
Health Care $ 5,153.3 $ 4,313.9 19.5 % $ 10,239.5 $ 8,491.0 20.6 %
Medical Benefit Ratios
Commercial 80.5 % 80.5 % - pts. 80.2 % 80.0 % .2 pts.
Medicare 86.9 % 88.2 % (1.3) pts. 86.4 % 88.1 % (1.7) pts.
Medicaid 89.8 % * * 91.3 % * *
Total 81.9 % 81.5 % .4 pts. 81.6 % 81.1 % .5 pts.
* Not meaningful
Group Insurance
(1)
Revenue $ 503.8 $ 553.1 (8.9) % $ 1,016.3 $ 1,097.2 (7.4) %
Benefit ratio 85.9 % 90.9 % (5.0) pts. 87.4 % 92.9 % (5.5) pts.
Refer to page 12 for an explanation of footnotes and definitions of terms used.
2

5. Health Care Membership
June 30, 2008 March 31, 2008 December 31, 2007 June 30, 2007
(Thousands) Insured ASC Total Insured ASC Total Insured ASC Total Insured ASC Total
Products
Medical:
Commercial 5,431 10,860 16,291 5,387 10,901 16,288 5,390 10,453 15,843 5,187 10,187 15,374
Medicare Advantage 360 - 360 350 - 350 193 - 193 189 - 189
Medicare Health Support Program - 13 13 - 14 14 - 14 14 - 15 15
Medicaid 178 657 835 174 641 815 166 637 803 48 141 189
Total Medical 5,969 11,530 17,499 5,911 11,556 17,467 5,749 11,104 16,853 5,424 10,343 15,767
(3)
Consumer-Directed Health Plans 1,388 1,359 994 960
Dental:
Commercial 5,007 7,539 12,546 5,008 7,584 12,592 5,037 7,269 12,306 4,979 7,195 12,174
Medicare & Medicaid 222 393 615 216 394 610 190 398 588 159 - 159
(4)
Network Access - 945 945 - 964 964 - 938 938 - 852 852
Total Dental 5,229 8,877 14,106 5,224 8,942 14,166 5,227 8,605 13,832 5,138 8,047 13,185
Pharmacy:
Commercial 9,736 9,746 9,613 9,461
Medicare PDP (stand-alone) 368 369 311 311
Medicare Advantage PDP 189 181 151 148
Medicaid 23 22 21 20
Total Pharmacy Benefit Management Services 10,316 10,318 10,096 9,940
(5)
Mail Order 652 633 636 646
Total Pharmacy 10,968 10,951 10,732 10,586
Regions
Northeast 1,121 1,527 2,648 1,117 1,534 2,651 1,154 1,471 2,625 1,130 1,451 2,581
Mid-Atlantic 1,080 1,767 2,847 1,075 1,766 2,841 1,074 1,767 2,841 1,003 1,642 2,645
Southeast 953 1,810 2,763 956 1,821 2,777 949 1,726 2,675 930 1,704 2,634
North Central 882 2,229 3,111 884 2,239 3,123 783 2,271 3,054 695 2,253 2,948
Southwest 673 2,049 2,722 662 2,043 2,705 669 1,880 2,549 650 1,809 2,459
West 1,045 2,006 3,051 1,022 2,004 3,026 987 1,852 2,839 895 1,408 2,303
Other 215 142 357 195 149 344 133 137 270 121 76 197
Total Medical 5,969 11,530 17,499 5,911 11,556 17,467 5,749 11,104 16,853 5,424 10,343 15,767
Percent of Total 34.1% 65.9% 100.0% 33.8% 66.2% 100.0% 34.1% 65.9% 100.0% 34.4% 65.6% 100.0%
Refer to page 12 for an explanation of footnotes and definitions of terms used.
3

6. Statements of Net Income (Loss) by Segment
Health Group Large Case Corporate
(Millions) Care Insurance Pensions Interest Consolidated
Three Months Ended June 30, 2008
Revenue:
Premiums $ 6,288.9 $ 414.4 $ 58.9 $ - $ 6,762.2
Fees and other revenue 802.4 23.9 3.0 - 829.3
Net investment income 94.4 65.5 98.8 - 258.7
(1)
Total revenue, excluding net realized capital losses 7,185.7 503.8 160.7 - 7,850.2
Benefits and expenses:
Health care costs 5,153.3 - - - 5,153.3
Current and future benefits - 356.0 144.8 - 500.8
Operating expenses:
Selling expenses 251.3 24.3 - - 275.6
General and administrative expenses 1,052.3 66.6 3.5 - 1,122.4
Total operating expenses 1,303.6 90.9 3.5 - 1,398.0
Interest expense - - - 56.6 56.6
Amortization of other acquired intangible assets 25.5 1.8 - - 27.3
Total benefits and expenses 6,482.4 448.7 148.3 56.6 7,136.0
Operating earnings (loss), excluding income taxes (benefits) 703.3 55.1 12.4 (56.6) 714.2
Income taxes (benefits) 249.4 15.8 2.5 (19.8) 247.9
Operating earnings (loss) 453.9 39.3 9.9 (36.8) 466.3
Reduction of reserve for anticipated future losses on discontinued products, net of tax - - 28.5 - 28.5
Net realized capital losses, net of tax (6.6) (5.2) (2.5) - (14.3)
Net income (loss) $ 447.3 $ 34.1 $ 35.9 $ (36.8) $ 480.5
Three Months Ended June 30, 2007
Revenue:
Premiums $ 5,292.8 $ 447.3 $ 55.9 $ - $ 5,796.0
Fees and other revenue 709.6 23.9 2.7 - 736.2
Net investment income 100.3 81.9 126.1 - 308.3
(1)
Total revenue, excluding net realized capital (losses) gains 6,102.7 553.1 184.7 - 6,840.5
Benefits and expenses:
Health care costs 4,313.9 - - - 4,313.9
Current and future benefits - 406.4 170.3 - 576.7
Operating expenses:
Selling expenses 231.9 24.9 - - 256.8
General and administrative expenses 887.0 66.7 3.9 - 957.6
Total operating expenses 1,118.9 91.6 3.9 - 1,214.4
Interest expense - - - 42.8 42.8
Amortization of other acquired intangible assets 20.1 1.7 - - 21.8
Total benefits and expenses 5,452.9 499.7 174.2 42.8 6,169.6
Operating earnings (loss), excluding income taxes (benefits) 649.8 53.4 10.5 (42.8) 670.9
Income taxes (benefits) 229.8 14.2 2.1 (15.0) 231.1
Operating earnings (loss) 420.0 39.2 8.4 (27.8) 439.8
Reduction of reserve for anticipated future losses on discontinued products, net of tax - 41.8 - 41.8
Net realized capital (losses) gains, net of tax (16.9) (13.6) .2 - (30.3)
Net income (loss) $ 403.1 $ 25.6 $ 50.4 $ (27.8) $ 451.3
Refer to page 12 for an explanation of footnotes and definitions of terms used.
4

7. Statements of Net Income (Loss) by Segment (Continued)
Health Group Large Case Corporate
(Millions) Care Insurance Pensions Interest Consolidated
Six Months Ended June 30, 2008
Revenue:
Premiums $ 12,542.4 $ 837.7 $ 110.8 $ - $ 13,490.9
Fees and other revenue 1,599.4 49.1 6.1 - 1,654.6
Net investment income 181.4 129.5 191.0 - 501.9
(1)
Total revenue, excluding net realized capital losses 14,323.2 1,016.3 307.9 - 15,647.4
Benefits and expenses:
Health care costs 10,239.5 - - - 10,239.5
Current and future benefits - 731.9 277.8 - 1,009.7
Operating expenses:
Selling expenses 530.6 48.8 - - 579.4
General and administrative expenses 2,082.9 129.4 7.2 - 2,219.5
Total operating expenses 2,613.5 178.2 7.2 - 2,798.9
Interest expense - - - 111.0 111.0
Amortization of other acquired intangible assets 51.6 3.5 - - 55.1
Total benefits and expenses 12,904.6 913.6 285.0 111.0 14,214.2
Operating earnings (loss), excluding income taxes (benefits) 1,418.6 102.7 22.9 (111.0) 1,433.2
Income taxes (benefits) 503.1 28.5 4.5 (38.8) 497.3
Operating earnings (loss) 915.5 74.2 18.4 (72.2) 935.9
Reduction of reserve for anticipated future losses on discontinued products, net of tax - - 28.5 - 28.5
Net realized capital losses, net of tax (20.6) (24.4) (7.3) - (52.3)
Net income (loss) $ 894.9 $ 49.8 $ 39.6 $ (72.2) $ 912.1
Six Months Ended June 30, 2007
Revenue:
Premiums $ 10,471.3 $ 886.9 $ 111.7 $ - $ 11,469.9
Fees and other revenue 1,413.1 50.0 5.9 - 1,469.0
Net investment income 187.4 160.3 255.1 - 602.8
(1)
Total revenue, excluding net realized capital (losses) gains 12,071.8 1,097.2 372.7 - 13,541.7
Benefits and expenses:
Health care costs 8,491.0 - - - 8,491.0
Current and future benefits - 823.6 343.5 - 1,167.1
Operating expenses:
Selling expenses 479.5 47.1 - - 526.6
General and administrative expenses 1,756.3 128.5 7.5 - 1,892.3
Total operating expenses 2,235.8 175.6 7.5 - 2,418.9
Interest expense - - - 85.1 85.1
Amortization of other acquired intangible assets 40.2 3.4 - - 43.6
Total benefits and expenses 10,767.0 1,002.6 351.0 85.1 12,205.7
Operating earnings (loss), excluding income taxes (benefits) 1,304.8 94.6 21.7 (85.1) 1,336.0
Income taxes (benefits) 462.1 24.3 4.2 (29.8) 460.8
Operating earnings (loss) 842.7 70.3 17.5 (55.3) 875.2
Reduction of reserve for anticipated future losses on discontinued products, net of tax - - 41.8 - 41.8
Net realized capital (losses) gains, net of tax (19.2) (13.4) 1.5 - (31.1)
Net income (loss) $ 823.5 $ 56.9 $ 60.8 $ (55.3) $ 885.9
Refer to page 12 for an explanation of footnotes and definitions of terms used.
5

8. Balance Sheets
June 30, 2008 December 31, 2007
Health Care Health Care
and Group Large Case and Group Large Case
(Millions) Insurance Pensions Consolidated Insurance Pensions Consolidated
Assets
Current assets:
Cash and cash equivalents $ 726.7 $ 104.1 $ 830.8 $ 1,140.8 $ 113.2 $ 1,254.0
Investments 328.1 165.5 493.6 567.3 284.2 851.5
Premiums receivable, net 692.7 - 692.7 479.8 - 479.8
Other receivables, net 571.2 48.8 620.0 511.5 77.6 589.1
Accrued investment income 123.8 71.7 195.5 114.7 74.5 189.2
Collateral received under securities loan agreements 614.6 387.3 1,001.9 698.7 443.7 1,142.4
Income taxes receivable 1.3 11.9 13.2 - - -
Deferred income taxes 240.2 41.5 281.7 265.4 56.3 321.7
Other current assets 437.0 4.0 441.0 385.1 53.6 438.7
Total current assets 3,735.6 834.8 4,570.4 4,163.3 1,103.1 5,266.4
Long-term investments 11,338.9 6,485.0 17,823.9 10,421.6 6,618.5 17,040.1
Reinsurance recoverables 1,057.6 12.5 1,070.1 1,079.1 14.1 1,093.2
Goodwill 5,081.3 - 5,081.3 5,081.0 - 5,081.0
Other acquired intangible assets, net 725.3 - 725.3 780.4 - 780.4
Property and equipment, net 353.9 39.5 393.4 314.6 49.4 364.0
Deferred income taxes (217.4) 231.2 13.8 - - -
Other long-term assets 1,959.6 - 1,959.6 1,850.2 - 1,850.2
Separate Accounts assets 2.4 7,052.0 7,054.4 2.9 19,246.5 19,249.4
Total assets $ 24,037.2 $ 14,655.0 $ 38,692.2 $ 23,693.1 $ 27,031.6 $ 50,724.7
Liabilities and shareholders' equity
Current liabilities:
Health care costs payable $ 2,488.8 $ - $ 2,488.8 $ 2,177.4 $ - $ 2,177.4
Future policy benefits 127.0 626.0 753.0 123.9 639.9 763.8
Unpaid claims 528.5 .8 529.3 625.3 .6 625.9
Unearned premiums 240.5 7.8 248.3 192.3 6.1 198.4
Policyholders' funds 702.6 79.7 782.3 522.3 145.9 668.2
Collateral payable under securities loan agreements 614.6 387.3 1,001.9 698.7 443.7 1,142.4
Short-term debt 632.1 3.5 635.6 116.9 13.8 130.7
Income taxes payable - - - 18.7 (12.8) 5.9
Accrued expenses and other current liabilities 1,909.4 136.3 2,045.7 1,745.9 216.1 1,962.0
Total current liabilities 7,243.5 1,241.4 8,484.9 6,221.4 1,453.3 7,674.7
Future policy benefits 1,971.6 5,126.0 7,097.6 1,969.1 5,284.1 7,253.2
Unpaid claims 1,254.8 - 1,254.8 1,234.1 - 1,234.1
Policyholders' funds 534.8 657.7 1,192.5 546.1 679.6 1,225.7
Long-term debt 3,139.1 - 3,139.1 3,138.5 - 3,138.5
Income taxes payable 8.7 - 8.7 13.0 - 13.0
Deferred income taxes - - - 327.4 (181.0) 146.4
Other long-term liabilities 722.7 31.6 754.3 729.4 21.9 751.3
Separate Accounts liabilities 2.4 7,052.0 7,054.4 2.9 19,246.5 19,249.4
Total liabilities 14,877.6 14,108.7 28,986.3 14,181.9 26,504.4 40,686.3
Shareholders' equity 9,159.6 546.3 9,705.9 9,511.2 527.2 10,038.4
Total liabilities and shareholders' equity $ 24,037.2 $ 14,655.0 $ 38,692.2 $ 23,693.1 $ 27,031.6 $ 50,724.7
Refer to page 12 for an explanation of footnotes, definitions and balance sheet terms used.
6

9. Condensed Statements of Cash Flows
Three Months Ended
June 30, 2008 June 30, 2007
Health Care Health Care
and Group Large Case and Group Large Case
(Millions) Insurance Pensions Consolidated Insurance Pensions Consolidated
Cash flows from operating activities:
Net income $ 444.6 $ 35.9 $ 480.5 $ 400.9 $ 50.4 $ 451.3
Adjustments to reconcile net income to net cash provided
by (used for) operating activities:
Depreciation and amortization 97.7 - 97.7 76.0 - 76.0
Stock-based compensation expense 23.8 - 23.8 20.5 - 20.5
Equity in earnings of affiliates, net 4.8 (.5) 4.3 (21.5) (25.6) (47.1)
Net realized capital losses (gains) 18.2 3.9 22.1 46.9 (.3) 46.6
(Accretion) amortization of net investment (discount) premium (.4) (4.3) (4.7) 3.3 (1.7) 1.6
Cash flows from operating activities before balance
sheet changes 588.7 35.0 623.7 526.1 22.8 548.9
Changes in assets and liabilities:
Accrued investment income (5.4) 4.4 (1.0) 1.4 6.5 7.9
Premiums due and other receivables (7.9) (.6) (8.5) (4.9) (.9) (5.8)
Income taxes (220.8) 6.8 (214.0) (229.9) (1.6) (231.5)
Other assets and other liabilities (40.8) 8.8 (32.0) 31.6 12.1 43.7
(6) (6)
Health care and insurance liabilities (74.3) (106.1) (180.4) 73.4 (115.6) (42.2)
Other, net (1.6) .3 (1.3) (.8) .1 (.7)
Net cash provided by (used for) operating activities 237.9 (51.4) 186.5 396.9 (76.6) 320.3
Cash flows from investing activities:
Proceeds from sales and maturities of investments 2,844.1 678.5 3,522.6 1,869.8 1,096.4 2,966.2
Cost of investments (3,185.5) (601.3) (3,786.8) (1,988.8) (1,008.9) (2,997.7)
Increase in property, equipment and software (110.2) - (110.2) (94.4) - (94.4)
Net cash (used for) provided by investing activities (451.6) 77.2 (374.4) (213.4) 87.5 (125.9)
Cash flows from financing activities:
Net issuance (repayment) of short-term debt 257.2 (.1) 257.1 (4.4) (5.1) (9.5)
Deposits and interest credited for investment contracts - 2.1 2.1 - 2.0 2.0
Withdrawals of investment contracts - (4.8) (4.8) - (3.2) (3.2)
Common shares issued under benefit plans 4.9 - 4.9 59.7 - 59.7
Stock-based compensation tax benefits 3.4 - 3.4 58.3 - 58.3
Common shares repurchased (604.6) - (604.6) (324.1) - (324.1)
Other, net (11.1) 1.0 (10.1) (.5) .5 -
Net cash used for financing activities (350.2) (1.8) (352.0) (211.0) (5.8) (216.8)
Net (decrease) increase in cash and cash equivalents (563.9) 24.0 (539.9) (27.5) 5.1 (22.4)
Cash and cash equivalents, beginning of period 1,290.6 80.1 1,370.7 1,324.3 105.5 1,429.8
Cash and cash equivalents, end of period $ 726.7 $ 104.1 $ 830.8 $ 1,296.8 $ 110.6 $ 1,407.4
Refer to page 12 for an explanation of footnotes and definitions of terms used.
7

10. Condensed Statements of Cash Flows (Continued)
Six Months Ended
June 30, 2008 June 30, 2007
Health Care Health Care
and Group Large Case and Group Large Case
(Millions) Insurance Pensions Total Insurance Pensions Total
Cash flows from operating activities:
Net income $ 872.5 $ 39.6 $ 912.1 $ 825.1 $ 60.8 $ 885.9
Adjustments to reconcile net income to net cash provided
by (used for) operating activities:
Depreciation and amortization 185.9 - 185.9 148.3 - 148.3
Stock-based compensation expense 55.5 - 55.5 45.7 - 45.7
Equity in earnings of affiliates, net 25.7 8.4 34.1 (26.7) (47.3) (74.0)
Net realized capital losses (gains) 69.3 11.3 80.6 50.2 (2.4) 47.8
Amortization (accretion) of net investment premium (discount) 4.0 (3.8) .2 11.8 (3.4) 8.4
Cash flows from operating activities before balance
sheet changes 1,212.9 55.5 1,268.4 1,054.4 7.7 1,062.1
Changes in assets and liabilities:
Accrued investment income (9.1) 2.8 (6.3) (1.4) 3.1 1.7
Premiums due and other receivables (273.0) .3 (272.7) (157.1) (.5) (157.6)
Income taxes (37.8) 10.9 (26.9) (37.8) (19.2) (57.0)
Other assets and other liabilities (89.0) 10.5 (78.5) (119.0) 12.2 (106.8)
(7) (6) (6)
Health care and insurance liabilities 395.7 (194.7) 201.0 563.9 (155.7) 408.2
Other, net (1.2) .3 (.9) (1.8) .2 (1.6)
Net cash provided by (used for) operating activities 1,198.5 (114.4) 1,084.1 1,301.2 (152.2) 1,149.0
Cash flows from investing activities:
Proceeds from sales and maturities of investments 5,055.0 1,271.4 6,326.4 3,290.7 1,947.7 5,238.4
Cost of investments (5,870.7) (1,155.2) (7,025.9) (3,459.9) (1,744.0) (5,203.9)
Increase in property, equipment and software (192.9) - (192.9) (173.8) - (173.8)
Net cash (used for) provided by investing activities (1,008.6) 116.2 (892.4) (343.0) 203.7 (139.3)
Cash flows from financing activities:
Net issuance (repayment) of short-term debt 516.1 (10.3) 505.8 (24.8) (19.9) (44.7)
Deposits and interest credited for investment contracts - 4.1 4.1 - 4.6 4.6
Withdrawals of investment contracts - (5.9) (5.9) - (4.4) (4.4)
Common shares issued under benefit plans 17.9 - 17.9 100.0 - 100.0
Stock-based compensation tax benefits 20.4 - 20.4 88.5 - 88.5
Common shares repurchased (1,157.2) - (1,157.2) (626.3) - (626.3)
Other, net (1.2) 1.2 - 10.9 (10.9) -
Net cash used for financing activities (604.0) (10.9) (614.9) (451.7) (30.6) (482.3)
Net (decrease) increase in cash and cash equivalents (414.1) (9.1) (423.2) 506.5 20.9 527.4
Cash and cash equivalents, beginning of period 1,140.8 113.2 1,254.0 790.3 89.7 880.0
Cash and cash equivalents, end of period $ 726.7 $ 104.1 $ 830.8 $ 1,296.8 $ 110.6 $ 1,407.4
Refer to page 12 for an explanation of footnotes and definitions of terms used.
8

11. Roll Forward of Health Care Costs Payable
Six Months Ended
June 30, Year Ended December 31,
(Millions) 2008 2007 2006 2005
Health care costs payable at beginning of period $ 2,177.4 $ 1,927.5 $ 1,817.0 $ 1,927.1
Less: reinsurance recoverables 2.9 3.7 5.5 5.6
Health care costs payable at beginning of period - net 2,174.5 1,923.8 1,811.5 1,921.5
Acquisition of businesses - 58.1 - 18.6
Incurred health care costs:
Current year 10,386.0 17,472.0 15,495.4 13,534.6
Prior years * (146.5) (177.2) (194.4) (426.7) **
Total incurred health care costs 10,239.5 17,294.8 15,301.0 13,107.9
Paid health care costs:
Current year 8,193.2 15,528.5 13,761.9 11,745.8
Prior years 1,734.1 1,573.7 1,426.8 1,490.7
Total paid health care costs 9,927.3 17,102.2 15,188.7 13,236.5
Health care costs payable at end of period - net 2,486.7 2,174.5 1,923.8 1,811.5
Plus: reinsurance recoverables 2.1 2.9 3.7 5.5
Health care costs payable at end of period $ 2,488.8 $ 2,177.4 $ 1,927.5 $ 1,817.0
Health care costs payable:
Incurred but not reported claims $ 2,145.4 $ 1,745.6 $ 1,507.7 $ 1,437.2
Other claims 343.4 431.8 419.8 379.8
Total Health care costs payable $ 2,488.8 $ 2,177.4 $ 1,927.5 $ 1,817.0
* Negative amounts reported for incurred health care costs related to prior years result from claims being settled for amounts less than originally estimated.
** Includes $103.0 million related to the release of reserves related to the New York Market Stabilization Pool.
Refer to page 12 for an explanation of footnotes and definitions of terms used.
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12. Reconciliations of Certain Reported Amounts to the Most Directly Comparable GAAP Measure
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
(Millions, except per common share data) 2008 2007 2008 2007
Summary of Results
Operating earnings $ 466.3 $ 439.8 $ 935.9 $ 875.2
Reduction of reserve for anticipated future losses on discontinued products 28.5 41.8 28.5 41.8
Net realized capital losses (14.3) (30.3) (52.3) (31.1)
Net income (GAAP measure) $ 480.5 $ 451.3 $ 912.1 $ 885.9
Weighted average common shares - diluted 495.8 531.8 502.4 534.1
Summary of Results Per Common Share
Operating earnings $ .94 $ .83 $ 1.86 $ 1.64
Reduction of reserve for anticipated future losses on discontinued products .06 .08 .06 .08
Net realized capital losses (.03) (.06) (.10) (.06)
Net income (GAAP measure) $ .97 $ .85 $ 1.82 $ 1.66
Health Care
Reconciliation of Revenue
Revenue, excluding net realized capital losses $ 7,185.7 $ 6,102.7 $ 14,323.2 $ 12,071.8
Net realized capital losses (10.2) (26.0) (31.7) (29.6)
Total revenue (GAAP measure) $ 7,175.5 $ 6,076.7 $ 14,291.5 $ 12,042.2
Group Insurance
Reconciliation of Revenue
Revenue, excluding net realized capital losses $ 503.8 $ 553.1 $ 1,016.3 $ 1,097.2
Net realized capital losses (8.0) (20.9) (37.6) (20.6)
Total revenue (GAAP measure) $ 495.8 $ 532.2 $ 978.7 $ 1,076.6
Large Case Pensions
Reconciliation of Revenue
Revenue, excluding net realized capital (losses) gains $ 160.7 $ 184.7 $ 307.9 $ 372.7
Net realized capital (losses) gains (3.9) .3 (11.3) 2.4
Total revenue (GAAP measure) $ 156.8 $ 185.0 $ 296.6 $ 375.1
Refer to page 12 for an explanation of footnotes and definitions of terms used.
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13. Reconciliations of Certain Reported Amounts to the Most Directly Comparable GAAP Measure (Continued)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
(Millions) 2008 2007 2008 2007
Reconciliation to Income Before Income Taxes
Operating earnings before income taxes, excluding interest expense and amortization
of other acquired intangible assets (A) $ 798.1 $ 735.5 $ 1,599.3 $ 1,464.7
Interest expense (56.6) (42.8) (111.0) (85.1)
Amortization of other acquired intangible assets (27.3) (21.8) (55.1) (43.6)
Reduction of reserve for anticipated future losses on discontinued products 43.8 64.3 43.8 64.3
Net realized capital losses (22.1) (46.6) (80.6) (47.8)
Income before income taxes (GAAP measure) (B) $ 735.9 $ 688.6 $ 1,396.4 $ 1,352.5
Reconciliation to Net Income
Operating earnings, excluding interest expense and amortization of other acquired
intangible assets (C) $ 520.8 $ 481.7 $ 1,043.9 $ 958.8
Interest expense, net of tax (36.8) (27.8) (72.2) (55.3)
Amortization of other acquired intangible assets, net of tax (17.7) (14.1) (35.8) (28.3)
Reduction of reserve for anticipated future losses on discontinued products, net of tax 28.5 41.8 28.5 41.8
Net realized capital losses, net of tax (14.3) (30.3) (52.3) (31.1)
Net income (GAAP measure) (D) $ 480.5 $ 451.3 $ 912.1 $ 885.9
Reconciliation of Revenue
Revenue, excluding net realized capital losses and 2007 acquisitions (E) $ 7,673.1 $ 6,840.5 $ 15,302.2 $ 13,541.7
Schaller Anderson and Goodhealth revenue 177.1 - 345.2 -
Revenue, excluding net realized capital losses (F) 7,850.2 6,840.5 15,647.4 13,541.7
Net realized capital losses (22.1) (46.6) (80.6) (47.8)
Total revenue (GAAP measure) (G) $ 7,828.1 $ 6,793.9 $ 15,566.8 $ 13,493.9
Operating Margin
Pretax operating margin (A)/(F) 10.2 % 10.8 % 10.2 % 10.8 %
Pretax operating margin (GAAP measure) (B)/(G) 9.4 % 10.1 % 9.0 % 10.0 %
After-tax operating margin (C)/(F) 6.6 % 7.0 % 6.7 % 7.1 %
After-tax operating margin (GAAP measure) (D)/(G) 6.1 % 6.6 % 5.9 % 6.6 %
Reconciliation of Operating Expenses
Operating expenses, excluding 2007 acquisitions (H) $ 1,331.2 $ 1,214.4 $ 2,669.8 $ 2,418.9
Schaller Anderson and Goodhealth operating expenses 66.8 - 129.1 -
Total operating expenses (GAAP measure) (I) $ 1,398.0 $ 1,214.4 $ 2,798.9 $ 2,418.9
Operating Expenses as a % of Revenue
Operating expenses as a % of revenue, excluding 2007 acquisitions (H)/(E) 17.3 % 17.8 % 17.4 % 17.9 %
Operating expenses as a % of revenue (I)/(F) 17.8 % 17.8 % 17.9 % 17.9 %
Total operating expenses as a % of total revenue (GAAP measure) (I)/(G) 17.9 % 17.9 % 18.0 % 17.9 %
Refer to page 12 for an explanation of footnotes and definitions of terms used.
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14. Footnotes
(1)
In order to provide a comparison that we believe provides useful information regarding our underlying performance, all operating earnings metrics exclude net realized capital gains and losses and
other items, if any, from net income. In addition, operating margins exclude interest expense and amortization of other acquired intangible assets. Also, revenue excludes net realized capital gains
and losses. We use these measures to assess business performance and to make decisions regarding our operations and allocation of resources among our businesses. For a reconciliation of
financial measures calculated under U.S. generally accepted accounting principles (quot;GAAPquot;), refer to pages 7-8 and footnote 2 below.
(2)
We acquired Schaller Anderson, Incorporated (quot;Schaller Andersonquot;) on July 31, 2007 and Goodhealth Worldwide (Bermuda) Limited (quot;Goodhealthquot;) on October 1, 2007. The results for the
three months ended June 30, 2008 included approximately $177 million of revenue in our Health Care segment attributable to these acquisitions, including approximately $119 million in premium
revenue and $56 million in fees and other revenue. Excluding these amounts, for the three months ended June 30, 2008, Health Care segment revenue increased by 15%, Health Care segment
premiums increased by 17% and consolidated fees and other revenue increased by 5%.
(3)
Represents members in consumer-directed health plans included in our Commercial medical membership.
(4)
Represents members in products that allow these members access to our dental provider network for a nominal fee.
(5) ®
Represents members who purchased medications through Aetna Rx Home Delivery, our mail order pharmacy, during the quarterly period.
(6)
Includes a reduction of the reserve for anticipated future losses on discountinued products of $44 million and $64 million for the three and six months ended June 30, 2008 and 2007, respectively.
Changes in insurance liabilities are satisfied by sales of related investment assets included in net cash provided by investment activities.
(7)
Includes approximately $127 million of cash proceeds for the six months ended June 30, 2008, for premium stabilization funds received from a large customer.
Definitions
Administrative Services Contracts (quot;ASCquot;) include all medical and dental products offered on an employer-funded basis. Under employer-funded plans, the plan sponsor assumes all or a majority
of health care cost, utilization or other risk.
After-tax Operating Margins are calculated by dividing after-tax operating earnings, excluding interest expense, amortization of other acquired intangible assets and other items, if any, by revenue,
excluding net realized capital gains (losses).
Benefit Ratios are calculated by dividing benefit costs by premiums. Various product level versions of this metric are provided and are calculated using this base formula. For example, the Total
Medical Benefit Ratio is calculated by dividing health care costs by health care premiums.
Commercial includes all medical, dental and other health care products except Medicare and Medicaid.
Days Claims Payable is calculated by dividing the health care costs payable at each quarter end by the health care costs per day in each respective quarter. Health care costs per day is derived by
dividing health care costs by ninety-one days.
Insured includes all medical, dental and other health care products for which we assume all or a majority of health care cost, utilization or other risk.
Operating Earnings exclude net realized capital gains (losses) and other items, if any, from net income.
Operating Expenses as a % of Revenue are calculated by dividing operating expenses, excluding other items, if any, by revenue, excluding net realized capital gains (losses).
Pretax Operating Margins are calculated by dividing pretax operating earnings, excluding interest expense, amortization of other acquired intangible assets and other items, if any, by revenue,
excluding net realized capital gains (losses).
Selling Expenses are comprised of broker commissions, the variable component of our internal sales force compensation and premium taxes.
Balance Sheet Terms
Future Policy Benefits consist primarily of reserves for limited payment pension and annuity contracts in the Large Case Pension business and long-duration group paid-up life and long-term care
insurance contracts in the Group Insurance business.
Health Care Costs Payable consist principally of unpaid fee-for-service claims, capitation costs and other amounts due to health care providers pursuant to insured arrangements.
Policyholders' Funds consist primarily of reserves for pension and annuity investment contracts in the Large Case Pension business and customer funds associated with group life and health
contracts in the Health Care and Group Insurance business.
Separate Account assets and liabilities in the Large Case Pensions business generally represent funds maintained to meet specific objectives of contract holders who bear the investment risk.
Unpaid Claims consist primarily of reserves associated with certain short-duration group disability and term life insurance contracts in the Group Insurance business.
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