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Aetna/9 Consolidated Statements of Income ($ in Millions) Three Months Ended December 31, 2001 2000 Continuing operations Revenue: Health care premiums Other premiums Administrative services contract fees (1) Net investment income Other income (2) Net realized capital gains (losses) Total revenue $ Benefits and expenses: Health care costs (3)(4) Current and future benefits (5) Operating expenses (6) Interest expense Amortization of goodwill and other acquired intangible assets Goodwill write-off Severance and facilities charge Reduction of reserve for loss on discontinued products Total benefits and expenses Loss from continuing operations before income taxes (benefits) and cumulative effect adjustment Income taxes (benefits) Loss from continuing operations before cumulative effect adjustment Cumulative effect adjustment, net of tax (7) Loss from continuing operations Income (loss) from discontinued operations, net of tax Net income (loss) Shareholders' equity 4,876.3 406.5 445.1 303.8 14.4 (3.6) 6,042.5 $ 4,333.7 536.4 1,150.3 40.9 100.5 192.5 6,354.3 $ (311.8) (112.8) (199.0) (199.0) 11.4 (187.6) 5,375.8 373.7 468.6 390.6 20.7 (31.0) 6,598.4 Twelve Months Ended December 31, 2001 2000 $ 4,685.7 531.1 1,252.8 57.0 107.7 310.2 142.5 7,087.0 $ (488.6) (116.6) (372.0) (372.0) (34.3) (406.3) 19,940.4 1,831.6 1,835.2 1,411.6 75.9 96.1 25,190.8 $ 21,746.6 1,468.3 1,925.9 1,631.6 86.6 (40.1) 26,818.9 17,938.8 2,458.3 4,515.0 142.8 416.6 192.5 (94.5) 25,569.5 $ $ 18,884.1 2,153.5 4,829.8 248.2 435.6 310.2 142.5 (146.0) 26,857.9 (378.7) (87.2) (291.5) 0.5 (291.0) 11.4 (279.6) (39.0) 88.4 (127.4) (127.4) 254.5 127.1 9,890.3 $ $ 10,127.1 (1) Includes $1.2 million for the twelve months ended December 31, 2001, ($22.1 million and $133.8 million for the three and twelve months ended December 31, 2000, respectively) of supplemental fees for servicing The Prudential Insurance Company of America's ("Prudential") administrative services contract business, including amortization of amounts established as part of the Prudential Healthcare ("PHC") purchase accounting. This arrangement ended in February 2001. (2) Includes $20.2 million for the twelve months ended December 31, 2001 of proceeds from the sale of the Company's New Jersey Medicaid membership. (3) Includes $19.9 million and $29.4 million for the three and twelve months ended December 31, 2001, respectively, ($32.1 million and $120.3 million for the three and twelve months ended December 31, 2000, respectively) related to recoveries under a reinsurance agreement with Prudential and recognition of a portion of the reinsurance premium paid (2000 period only), as well as the net amortization of amounts established as part of the PHC purchase accounting. The reinsurance agreement ended on December 31, 2000, except that the agreement provided for a period of time during which medical cost reimbursements (as calculated in accordance with the agreement) were to be finalized, which occurred in the fourth quarter of 2001. The three and twelve months ended December 31, 2001 include the net benefit from the settlement of $17.5 million. (4) Includes an other item of $1.7 million for the three months ended December 31, 2001, of favorable reserve developments related to Medicare markets the Company exited January 1, 2001. The twelve months ended December 31, 2001 reflect a $39.9 million charge for unfavorable reserve developments related to these markets. (5) Includes an other item of $13.8 million for the twelve months ended December 31, 2001, of life insurance costs, net of reinsurance, related to the events of September 11, 2001. (6) Includes an other item for the three months and twelve months ended December 31, 2000, which is other change-in-control related costs of $78.0 million; and for the twelve months ended December 31, 2000, an $8.0 million charge related to a shareholder litigation settlement agreement, and a $22.5 million charge related to an assessment for the New Jersey Insolvency Fund. (7) Cumulative effect adjustment relates to the adoption of a new accounting standard, Accounting for Derivative Instruments and Hedging Activities (FAS No. 133). Aetna/10 Per Share Data Three Months Ended December 31, 2001 2000 Twelve Months Ended December 31, 2001 2000 Results per common share: (1) Operating earnings (loss) from continuing operations before cumulative effect adjustment, and excluding other items (2) $ (.59) $ .20 $ (1.86) $ 1.35 Operating loss from continuing operations before cumulative effect adjustment, and including other items (2) $ (1.45) $ (2.49) $ (2.55) $ (0.80) Loss from continuing operations $ (1.38) $ (2.63) $ (2.03) $ (0.90) Income (loss) from discontinued operations $ .08 $ (0.24) $ .08 $ 1.80 Net income (loss) $ (1.30) $ (2.87) $ (1.95) $ .90 $ 68.56 $ 71.04 Shareholders' equity Weighted average common shares - basic 143,806,461 141,588,343 143,217,710 141,260,928 Weighted average common shares - diluted (1) 146,498,254 144,375,675 145,740,082 143,139,374 Note: Prior to December 13, 2000, the Company (formerly Aetna U.S. Healthcare, Inc.) was a subsidiary of Aetna Inc., a Connecticut corporation ("former Aetna"). On December 13, 2000, former Aetna spun off the Company to shareholders. As part of the same transaction, the remaining entity, which contained former Aetna's financial services and international businesses, was merged into a subsidiary of ING Groep N.V. The financial services and international businesses are reflected as discontinued operations, since the Company is the successor of former Aetna for accounting purposes. (1) (2) For earnings per common share calculations where a loss exists, no potential common share equivalents were considered, since inclusion of such equivalents would be anti-dilutive. Actual common shares outstanding at December 31, 2001 were 144.3 million Other items are displayed by Segment on Page 11. Additional information about the Company's results is published in the 2001 Fourth Quarter Financial Supplement available from Dennis Oakes, Investor Relations, (860) 273-6184, in the Company's 2001 Form 10-K to be filed with the Securities and Exchange Commission, or is available from our Web site, http://www.aetna.com. Aetna/11 Segment Information (1) ($ in Millions) Three Months Ended December 31, 2001 2000 Health Care: Revenue Operating earnings (loss) before goodwill amortization and other items Goodwill and other intangibles amortization, net of tax Operating earnings (losses) before other items Other items (see detail below) Operating losses after other items Group Insurance: Revenue Operating earnings before other items Other items (see detail below) Operating earnings after other items Large Case Pensions: Revenue Operating earnings before other items Other items (see detail below) Operating earnings after other items Corporate Interest Expense (after-tax) Total Company: Operating earnings (losses) from continuing operations before other items and cumulative effect adjustment Other items, net of tax: Health Care Segment: Favorable (unfavorable) reserve runoff - exited Medicare markets Severance and facilities charge Goodwill write-off Other change-in-control related costs Shareholder litigation settlement agreement Assessment - New Jersey HMO Insolvency Fund Subtotal Group Insurance Segment: Events of September 11, 2001 Other change-in-control related costs Subtotal Large Case Pensions Segment: Reduction of reserve for loss on discontinued products Subtotal Net realized capital gains (losses) Loss from continuing operations before cumulative effect adjustment Cumulative effect adjustment, net of tax Loss from continuing operations Income (loss) from discontinued operations, net of tax Net income (loss) Twelve Months Ended December 31 2001 2000 $ 5,398.6 $ (16.1) (82.0) (98.1) (124.0) $ (222.1) $ 5,955.0 $ 89.8 (86.5) 3.3 (381.6) $ (378.3) $ 22,167.8 $ (27.6) (337.7) (365.3) (151.1) $ (516.4) $ $ $ $ $ $ $ $ $ $ $ $ 417.1 36.3 36.3 $ 230.4 3.8 3.8 $ $ $ $ $ $ 1,226.0 31.6 61.4 93.0 $ $ $ 1,667.9 193.4 (0.3) 193.1 $ $ (26.6) $ (37.0) $ (92.8) $ (161.3) (84.6) $ 28.7 $ (266.4) $ 193.6 $ 1,067.7 66.0 94.9 160.9 (92.6) (238.3) (50.7) (381.6) - (26.0) (125.1) (151.1) (92.6) (238.3) (50.7) (5.2) (14.6) (401.4) (0.3) (0.3) - 9.6 (199.0) (199.0) 11.4 (187.6) $ $ 1,700.9 160.1 (9.0) 151.1 24,123.4 445.9 (350.4) 95.5 (401.4) (305.9) 246.6 15.3 15.3 1.1 (125.1) (124.0) $ 427.8 47.1 (0.3) 46.8 $ $ (9.0) (9.0) (0.3) (0.3) 61.4 61.4 94.9 94.9 73.6 (291.5) .5 (291.0) 11.4 (279.6) (14.2) (127.4) (127.4) 254.5 127.1 - $ (18.8) (372.0) (372.0) (34.3) (406.3) $ (1) All amounts, except revenue, are presented net of taxes. Revenue and operating earnings exclude net realized capital gains (losses). $ Aetna/12 Enrollment and Other Statistics December 31, 2001 December 31, 2000 (1) September 30, 2001 % Change From: December 31, September 30, 2000 2001 Membership by Product: (Thousands) Health Care Commercial HMO POS PPO Indemnity Total Commercial Membership 7,798 3,003 4,075 1,895 16,771 8,647 3,738 4,005 2,173 18,563 8,083 3,038 4,075 1,910 17,106 (9.8) (19.7) 1.7 (12.8) (9.7) (3.5) (1.2) (0.8) (2.0) Medicare HMO Medicaid HMO Total Health Care Membership 255 144 17,170 549 225 19,337 274 138 17,518 (53.6) (36.0) (11.2) (6.9) 4.3 (2.0) Dental Membership 13,459 14,251 13,682 (5.6) (1.6) Total Group Insurance 11,480 11,684 11,680 (1.7) (1.7) Three Months Ended December 31, December 31, September 30, 2001 2000 2001 Twelve Months Ended December 31, December 31, 2001 2000 Medical Cost Ratios: Commercial Risk Commercial HMO Medicare HMO (2) Medicare HMO - 2001 Markets 89.0% 89.7% 92.5% 92.9% 85.7% 87.2% 97.5% 91.8% 89.1% 90.1% 92.3% 92.9% 89.3% 90.3% 95.7% 93.7% 85.1% 86.3% 97.0% 91.6% Operating Margins (3): Total Company Pretax After-tax 0.4% 0.4% 3.6% 2.3% 1.4% 0.9% 0.9% 0.7% 4.1% 2.6% (1) Membership for prior periods has been restated to include Aetna Global Benefits (which was previously part of former Aetna) and certain reclassifications have been made to conform to the 2001 presentation. (2) The three months ended December 31, 2001 includes $1.7 million pretax ($1.1 million after-tax) of favorable reserve developments related to Medicare markets the Company exited January 1, 2001. The three months ended September 30, 2001 includes $2.9 million pretax ($1.9 million after-tax) of favorable reserve developments related to these markets. The twelve months ended December 31, 2001 reflect a $39.9 million pretax charge ($26.0 million after-tax) for unfavorable reserve developments related to these markets. (3) Pretax and After-tax Operating Margins are calculated by dividing pretax/after-tax operating earnings (loss) excluding other items, interest expense, and amortization of goodwill and other acquired intangible assets by total revenue excluding net realized capital gains or losses.