Aetna is descended from Aetna (Fire) Insurance Company in Hartford, Connecticut. [6] The company`s name is based on Mount Etna, at the time the most active volcano in Europe. [7] By February 2000, Aetna`s stock had fallen to $39 after losing two-thirds of its value since August 1997. Growing shareholder pressure led to Huber`s sudden resignation this month. William H. Donaldson, co-founder of investment banking firm Donaldson, Lufkin & Jenrette, Inc., has been appointed President and Chief Executive Officer. In late February, managed care firm WellPoint Health Networks Inc. and the U.S. arm of Dutch financial services giant ING Groep N.V. jointly approached Aetna for a $10.5 billion acquisition.
But the company`s board rejected the unsolicited offer, instead announcing in March that the company would split, creating two separate companies focused on healthcare and financial services. With the inauguration of Beers, the long history of family control came to an end and a new era of shorter presidencies began. In 1962, Beers became president and J.A. Hill became president. A year later, Olcott D. Smith Beers succeeded him as president. In 1972, John H. Filer Smith succeeded him as president and Donald M. Johnson was appointed president in 1970. In 1976, William O.
Bailey succeeded Johnson. During these years of fairly rapid changes in management, the position of Chairman and Chief Executive Officer has prevailed over that of President and Chief Operating Officer. During a change of management in mid-1997, the former head of the bank, Richard L. Huber, was named president and CEO, continuing his efforts to streamline Aetna and focus the company`s workforce on what it had proven best. “We take care of what`s most important to the vast majority of the population,” Huber says, their health and prosperity. In February 1998, Huber was also named president, succeeding outgoing Compton. In 1996, under the leadership of Compton and the new president of strategy and finance Richard L. Huber, Aetna began to shed both its corporate malaise and its traditional methods of operation. Aetna continued to divest itself of the loss of real estate investment after the sale of its property and casualty insurance business and has now focused on aggressively expanding its interests in managed health and retirement services, a potentially risky mix that some industry analysts say represents a potentially risky mix and about which Huber himself would admit in the Hartford Courant that “demographics are fate.” In April 1996, the company paid $8.9 billion to HMO provider U.S. Healthcare, Inc., transforming Aetna into the nation`s largest managed healthcare provider. Parent company Aetna Life & Casualty was renamed Aetna Inc., with the company realigning around the new name and identity.
Aetna`s existing health insurance business was merged with U.S. Healthcare, which became a subsidiary of Aetna, and Aetna U.S. Healthcare Inc. was renamed. Aetna was founded in Connecticut in 1853 as the Aetna Life Insurance Company. Aetna Life was originally founded as a subsidiary of the former Aetna Insurance Company, specializing in fire insurance (and named after Mount Etna, the Sicilian volcano), and has benefited from its association with Aetna`s reputation for reliability and speed in paying claims. A new state insurance by-law, passed in neighboring New York in 1849 and tightened in 1853, prohibited the same company from offering both fire and life insurance. In 1853, the Connecticut Legislature granted a petition for the separate formation of the Aetna Life Insurance Company. For a few years, this new company issued all the new forms of insurance offered by Aetna, but soon further diversification was necessary. In 1912, Aetna offered the first comprehensive auto policy that offered all types of auto insurance in one contract, and in 1913, a second Aetna subsidiary was founded, the Automobile Insurance Company.
The charter of this second subsidiary also allowed it to manage other lines of insurance, including loss of use, explosion, tornado and storm, lease and rent. In 1916, Aetna Auto began offering transportation insurance, a line that was significantly expanded during the First World War. Meanwhile, the Aetna Accident and Liability Company expanded its loyalty and bonding business, changing its name to the Aetna Casualty and Surety Company in 1917. In 1913, Aetna created a group division to sell group life insurance. Group disability policies were first offered in 1919. However, ING remained interested in an agreement, and in July the two sides reached an agreement. The complex transaction was completed in December 2000. Aetna Inc. has sold its subsidiary Aetna U.S.
Healthcare Inc. to its shareholders. What was left of Aetna – the company`s international and financial services units – was acquired by ING for around $7.75 billion. Aetna USA Healthcare was later renamed Aetna Inc. (meaning that the “new” Aetna would date back to that of United States Health Care Systems, Inc. in 1982). As a result, the new Aetna focused almost exclusively on U.S. health and dental insurance and related products; She retained much smaller businesses in group life, disability and long-term care insurance, as well as in large nurses.
To shake up the struggling company, Donaldson called on John W. Rowe as President and Chief Executive Officer in September 2000. A well-known gerontologist, Rowe most recently served as director of Mount Sinai NYU Health, a group of new York City nonprofit hospitals. In April 2001, Rowe was also appointed President of Aetna. Another important appointment was ronald A. Williams, who was appointed Executive Vice President and Chief Health Officer in March 2001. Williams was hired by Aetna rival WellPoint Health Networks and promoted to president of Aetna in May 2002. This appeal was dismissed and the dismissal was largely upheld on appeal. [95] [96] New challenges posed by the transformation of the economy in the early 1990s In the late 1960s, Aetna experienced a sharp decline in profits, a trend that reflected an increase in industry-wide claims. The decline reversed in the early 1970s, partly due to the national decline in losses and premium increases, and partly due to Aetna`s decision to control costs and focus on the most profitable lines of insurance. Nevertheless, rapid diversification into non-insurance-related areas later in the same decade undermined previous profits.
The particularly unfortunate acquisitions were Geosource Inc., an oilfield services company, and Satellite Business Systems, a communications company. Despite a slowly improving economy, the continued deterioration of Aetna`s mortgage portfolio will force it to continue its rationalization efforts, and in June 1992 the company laid off 10% of its workforce. Plagued by natural disasters and inclement weather for the rest of the year — winter storms in the fourth quarter alone caused nearly 18,000 losses totaling $118 million — as well as a $55 million fee to deduct its Massachusetts auto insurance services, the company saw its net income erode to $56 million in 1992. For more information, see the SEC`s Privacy and Security Policy. Thank you for your interest in the U.S. Securities and Exchange Commission. In fact, at the time, many doctors and consumers were in open rebellion against the policies that had prevailed at Aetna since the purchase of U.S. Healthcare. It turned out that Aetna had made this acquisition at a peak and therefore paid a high price.
The company began to pressure doctors and patients to improve their profits. Doctors disliked the restrictions imposed by Aetna`s contracts, and the company faced a series of class action lawsuits, not only from doctors, but also from patients who claimed they had been denied treatment. Aetna`s struggles were compounded by the difficulties it had in integrating its operations with those of the U.S. healthcare system, as well as the discovery that the newly acquired Prudential Health unit was losing more money than expected. Despite the steady increase in revenues, profits increased from $901 million in 1997 to $848.1 million in 1998 to $716.9 million in 1999. However, such an expansion has come at no cost. The Automobile Insurance Company, one of Aetna Life`s subsidiaries, had contributed to the dramatic increases of the 1920s. In 1922, the subsidiary`s premium revenues reached $11 million; in 1923 $19 million; and by 1924 premium income had reached $30 million. However, the affiliate`s success was not based on a solid financial foundation. In March 1926 Brainard discovered that the Automobile Insurance Company had underestimated its responsibilities and had undertaken more business than it could handle.
The naval department of the subsidiary had grown rapidly during the war years, but had shown poor judgment in the selection of risks, especially after the First World War, when the acquisition of naval activities should have been restricted. Auto insurance had also gained new business by taking risks from other companies.