Aetna Could Cut Jobs

Health insurer Aetna Inc. has warned employees that it will pursue "selective" staff cuts as it adjusts to the major economic downturn it expects for next year.

Company Chairman and CEO Ronald Williams did not say how many cuts would be made in a memo posted Wednesday on the company's intranet site. He also did not offer a time frame.

Aetna was looking at staff reductions as it pursues "all appropriate options" to reduce costs, Williams said.

"The bottom line is that most U.S. businesses anticipate a major economic slowdown in 2009 and are taking steps to streamline their organizations and cut costs," Williams wrote. "We must do the same."
Hartford-based Aetna employs 36,139 people, up slightly from the 35,396 it employed in the second quarter this year.

Aetna will add a couple of big national accounts Jan. 1, when Bank of America Corp. and Home Depot Inc. join its customer base. Company leaders said during its third-quarter conference call last month they expect to add 800,000 new members next year.

But the insurer also anticipates a slowdown. Managed care companies lose business when their employer customers cut jobs and decrease the number of people covered by insurance.

Aetna is making other cost cuts, too. It is restricting hiring and has cut travel for internal company meetings, among other measures.

"We're just trying to be prudent as we look toward next year and adjust to the realities of the situation we're facing," spokesman Fred Laberge said.

The company reported last month that its overall membership grew 1 percent to 17.7 million in the third quarter, and analysts have said the company's balance sheet remains strong.

Aetna is the third-largest U.S. managed-care company, based on enrollment.  It trails only WellPoint Inc. and UnitedHealth Group Inc.

But the insurer already is feeling some effects from a shaky economy. Its third-quarter earnings dropped 44 percent to $277.3 million, or 58 cents per share, due mainly to investment losses.

Aetna also reduced its full-year operating earnings guidance to between $3.90 and $3.95 per share from $4 due to a "turbulent investment environment," Williams has said.

Copyright AP - Associated Press
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