NU Online News Service, May 26, 2004, 1:05 p.m. EDT – Aetna Inc., Hartford, is doing better.[@@]

Analyst’s at Moody’s Investors Service, New York, have delivered that assessment in a comment that changes the rating agency’s outlook on the company to positive, from stable.

Moody’s has assigned a credit rating of Baa2 to Aetna’s senior unsecured debt and an insurance financial strength rating of A2 to Aetna’s Aetna Life Insurance Company unit.

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.