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Who’s Earning What
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Business New Haven
10/20/1997
By: Russell Stone
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HARTFORD - Aetna (NYSE: AET) joined other insurance and HMO companies in announcing that its quarterly earnings would fall below expectations. Aetna said it would take a charge against earnings of $75 million to $105 million in the third quarter to increase its reserve against medical claims. In addition, the company stated its earnings before the charge would be 95 cents to $1.10 per share, significantly under the earlier consensus estimate of $1.31. The charge would come to 50 to 70 cents per share. Aetna President Richard Huber said health-care costs were significantly higher than expected, leading to the profit shortfall. Aetna also announced it would take advantage of the fall in its share price to carry out a buy-back program of 7.5 million shares. As a result of Aetna's problems with its US Healthcare subsidiary, Merrill Lynch downgraded the stock from accumulate to neutral.
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