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October 12, 2006
HARTFORD, Conn. --Aetna Inc. announced Thursday it will lay off about 650 workers, including 200 in management posts.
The action is partly to reduce administrative expenses, the insurer said in a statement.
The layoffs, 280 of which will be in Connecticut, account for about 2 percent of the company's work force.
Aetna said it will take a fourth quarter charge of about $20 million after taxes related to severance costs.
"These actions are focused squarely on our future, and making certain that Aetna is well positioned to take advantage of new opportunities with an efficient and flexible customer-focused operating structure," said Ronald Williams, chairman and chief executive.
Alan Bennett, senior vice president and chief financial officer, said Thursday's action "will help the company achieve a more competitive cost structure for the future."
"Although this is very difficult for those affected, these actions will help assure our continuing long-term success in the marketplace," he said in a statement.
Aetna reported in July that second-quarter earnings dipped 1 percent due to growing costs from large claims and competitive pressures.
Net income slipped to $389.5 million, or 67 cents per share, from $394.9 million, or 65 cents per share, in the year-ago period, which was based on about 23 million more average shares outstanding.
"We've been working over the past couple of years to bring down the cost structure," Aetna spokesman David Carter said. "We think that by reducing administrative expenses, by streamlining corporate and business operations and streamlining management, it's going to help us provide affordable health care to our customers.
"We're very cognizant that while we've continued to bring down costs we have competitors doing the same thing," Carter said.
Aetna shares rose 27 cents to close at $40.22 on the New York Stock Exchange.
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