Rating Agency Praises Aetna

Pension plan contributions, reserve increases at its large-case pension business and the cost of past restructuring efforts have hurt Aetna’s current cash flow, but Aetna has plenty of cash, its earnings are up and its major medical enrollment has started to grow again, the Moody’s analysts write in the comment on the outlook change.

The Moody’s analysts praise the efforts of Aetna’s chief executive, Dr. John Rowe, to cut administrative costs and implement new ideas.

If Aetna achieves a 5% membership growth rate for 2004 and ends the year with 6 times as much operating cash flow as it needs to cover its interest expenses, Moody’s might raise Aetna’s ratings.