Aetna’s chief stepping down

HARTFORD, Conn. (AP) – The chief executive of Aetna Inc., one of the nation’s largest health insurers, will retire next month, ending a tenure in which he led the once-struggling company to renewed profitability and expanded operations that include specialty businesses and national participation in a new Medicare drug program.

John W. Rowe also will retire as chairman before the end of the year, Aetna said.

Aetna named President Ronald A. Williams, 56, to succeed Rowe as chief executive on Feb. 14. An executive of an insurance rating service praised the succession, saying Williams’ close work with Rowe assures a continuation of the Hartford-based insurer’s successful financial plan.

In a statement, Rowe, 61, said he told Aetna’s board some time ago that he wanted to retire when his employment contract expires on Dec. 31. He has not been specific about when he spoke with the board, Aetna spokesman David Carter said.

“As a result of a very thorough succession planning process, we decided that naming Ron Williams CEO early in the year would provide for an orderly transition,” he said.

Williams joined Aetna as executive vice president and chief of health operations in March 2001 and became president in 2002. He had served as group president of WellPoint Health Networks’ large group division and president of WellPoint’s Blue Cross of California unit.

Aetna benefited from a “tremendous platform we’ve built over the last few years,” he said in an interview Wednesday. He said he intends “to make Aetna the most preferred health plan by consumers, plan sponsors and physicians.”

Aetna shares closed Wednesday at $94.42 a share, up 36 cents on the New York Stock Exchange, nearer the high end of its 52-week range of $59.85 to $99.36.

Rowe, who has served as chief executive since December 2000, said in an interview Wednesday he has not decided on a new course.

“I would like to move on to the next challenge or opportunity,” he said. “I fully expect to work full time. We’ll see who calls today.”

Aetna said it will hire Rowe as a consultant for his expertise on specific health business issues.

Rowe, a physician by training, is credited by many observers with leading Aetna’s turnaround from a financially troubled insurer to a profitable company with specialty pharmacy and behavioral health businesses and a role as a national player in the Medicare prescription drug program.

Aetna shed employees and business and mended fences with doctors, sold off portions of the company, trimmed its work force and exited unprofitable markets while raising rates and paring costs.

Dana Mehta, assistant vice president of A.M. Best Co. in Oldwick, N.J., an insurance rating and information agency, said numerous officials at Aetna deserve credit for Aetna’s renewed profitability.

“All of them had made a valuable contribution and Dr. Rowe had provided good strategic direction,” she said.

Williams, who worked closely with Rowe, will not likely bring any changes in philosophy when he takes over, Mehta said.

“I see no reason to believe he will do anything differently,” she said.

In October, Aetna said earnings for the third quarter fell from results that included hefty gains a year ago, but said its membership grew. Net income fell to $377.8 million, or $1.26 a share, for the three months ended Sept. 30 from $1.29 billion, or $4.10 per share, a year ago. The year-ago results included a $740 million tax refund and favorable tax reserve adjustments of $250 million related to discontinued operations.

Aetna said its operating earnings rose to $1.19 per share in the quarter from 88 cents a share a year earlier.

Revenue increased 13 percent to $5.7 billion from $5 billion, as the company saw strong membership gains, pushed through premium and rate increases and kept costs under control.

Drew Altman, president and chief executive of the Kaiser Family Foundation, a health care research group, praised Rowe for multiple accomplishments.

Altman, who said Rowe worked and trained at a hospital with Altman’s father, said the Aetna executive is a “world leading researcher, clinician, hospital administrator and health insurance company CEO.”

“He’s one of a kind,” he said.

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On the Net: www.aetna.com