<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1995
_______________
Commission file number 1-5704
________
Aetna Life and Casualty Company
___________________________________________________________________________
(Exact name of registrant as specified in its charter)
Connecticut 06-0843808
___________________________________________________________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
151 Farmington Avenue, Hartford, Connecticut 06156
___________________________________________________________________________
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code (203) 273-0123
______________________
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No _____
_____
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Shares Outstanding
Title of Class at June 30, 1995
________________ __________________
Common Capital Stock 113,219,998
without par value
<PAGE> 2
TABLE OF CONTENTS
_________________
Page
____
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Statements of Income 3
Consolidated Balance Sheets 4
Consolidated Statements of Shareholders'
Equity 6
Consolidated Statements of Cash Flows 7
Condensed Notes to Financial Statements 8
Independent Auditors' Review Report 21
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations. 22
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. 52
Item 4. Submission of Matters to a Vote
of Security Holders. 52
Item 5. Other Information. 53
Item 6. Exhibits and Reports on Form 8-K. 54
Signatures 55
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
AETNA LIFE AND CASUALTY COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
________________________ ___________________________
(Millions, except share and per share data) 1995 1994 1995 1994
____ ____ ____ ____
<S> <C> <C> <C> <C>
Revenue:
Premiums.................................. $ 2,825.7 $ 2,839.0 $ 5,754.7 $ 5,581.3
Net investment income..................... 1,140.6 1,121.0 2,226.5 2,247.5
Fees and other income..................... 506.7 465.8 982.7 926.4
Net realized capital losses............... (25.9) (13.4) (32.3) (19.3)
___________ ___________ ___________ ___________
Total revenue......................... 4,447.1 4,412.4 8,931.6 8,735.9
___________ ___________ ___________ ___________
Benefits and expenses:
Current and future benefits............... 3,767.4 3,114.5 6,889.8 6,232.1
Operating expenses........................ 962.0 924.5 1,897.0 1,882.0
Amortization of deferred policy
acquisition costs....................... 196.6 185.2 383.8 377.2
___________ ___________ ___________ ___________
Total benefits and expenses........... 4,926.0 4,224.2 9,170.6 8,491.3
___________ ___________ ___________ ___________
Income(Loss) before income taxes............ (478.9) 188.2 (239.0) 244.6
Federal and foreign income taxes (benefits):
Current................................... (7.2) (27.9) (26.4) (25.6)
Deferred.................................. (174.8) 83.7 (76.5) 92.1
___________ ___________ ___________ ___________
Total federal and foreign income taxes
(benefits).......................... (182.0) 55.8 (102.9) 66.5
___________ ___________ ___________ ___________
Net income(loss)...................... $ (296.9) $ 132.4 $ (136.1) $ 178.1
___________ ___________ ___________ ___________
___________ ___________ ___________ ___________
Results per common share:
Net income(loss)............................ $ (2.62) $ 1.17 $ (1.20) $ 1.58
___________ ___________ ___________ ___________
___________ ___________ ___________ ___________
Dividends declared.......................... $ .69 $ .69 $ 1.38 $ 1.38
___________ ___________ ___________ ___________
___________ ___________ ___________ ___________
Weighted average common shares
outstanding............................... 113,033,255 112,904,466 112,871,537 112,956,551
___________ ___________ ___________ ___________
___________ ___________ ___________ ___________
<FN>
See Condensed Notes to Financial Statements.
</TABLE>
<PAGE> 4
AETNA LIFE AND CASUALTY COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
(Millions) 1995 1994
_____________ ____________
<S> <C> <C>
Assets:
Investments:
Debt securities:
Held for investment, at amortized
cost (fair value $1,823.8 and
$1,991.2)....................... $ 1,786.4 $ 2,000.8
Available for sale, at fair value
(amortized cost $38,438.5 and
$36,984.2)...................... 39,583.4 35,110.7
Equity securities, at fair value
(cost $1,152.8 and $1,326.9)....... 1,585.8 1,655.6
Short-term investments.............. 520.2 450.4
Mortgage loans...................... 10,802.6 11,843.6
Real estate......................... 1,618.7 1,545.7
Policy loans........................ 571.0 533.8
Other............................... 1,215.2 1,152.7
___________ __________
Total investments............... 57,683.3 54,293.3
Cash and cash equivalents............. 2,151.0 2,953.6
Reinsurance recoverables and
receivables.......................... 5,307.2 5,011.0
Accrued investment income............. 759.0 777.2
Premiums due and other receivables.... 1,827.9 1,722.9
Federal and foreign income taxes:
Current............................. 151.3 18.3
Deferred............................ 1,125.1 1,266.7
Deferred policy acquisition costs..... 2,126.9 2,014.7
Other assets.......................... 2,054.2 1,992.2
Separate Accounts assets.............. 26,683.1 24,122.6
___________ __________
Total assets.................... $ 99,869.0 $ 94,172.5
___________ __________
___________ __________
<FN>
See Condensed Notes to Financial Statements.
</TABLE>
<PAGE> 5
AETNA LIFE AND CASUALTY COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Continued)
<TABLE>
<CAPTION>
June 30, December 31,
(Millions, except share and per share data) 1995 1994
_____________ ____________
<S> <C> <C>
Liabilities:
Future policy benefits........................ $ 17,803.1 $ 17,979.2
Unpaid claims and claim expenses.............. 18,242.7 17,478.3
Unearned premiums............................. 1,641.4 1,604.9
Policyholders' funds left with the company.... 23,875.1 23,223.1
__________ __________
Total insurance reserve liabilities....... 61,562.3 60,285.5
Dividends payable to shareholders............. 78.1 77.7
Short-term debt............................... 60.4 23.9
Long-term debt................................ 1,117.9 1,114.7
Other liabilities............................. 3,393.2 2,718.6
Participating policyholders' interests........ 189.7 170.5
Separate Accounts liabilities................. 26,539.4 24,003.6
__________ __________
Total liabilities......................... 92,941.0 88,394.5
__________ __________
Minority interest in preferred securities
of subsidiary.................................. 275.0 275.0
__________ __________
Shareholders' Equity:
Class A Voting Preferred Stock (no par
value; 10,000,000 shares authorized;
no shares issued or outstanding)............. - -
Class B Voting Preferred Stock (no par
value; 15,000,000 shares authorized;
no shares issued or outstanding)............. - -
Class C Non-Voting Preferred Stock (no
par value; 15,000,000 shares authorized;
no shares issued or outstanding)............. - -
Common Capital Stock (no par value;
250,000,000 shares authorized;
114,939,275 issued; and 113,219,998
and 112,657,758 outstanding)................. 1,415.9 1,419.2
Net unrealized capital gains (losses)......... 344.6 (1,071.5)
Retained earnings............................. 4,967.1 5,259.6
Treasury stock, at cost (1,719,277 and
2,281,517 shares)............................ (74.6) (104.3)
__________ __________
Total shareholders' equity................ 6,653.0 5,503.0
__________ __________
Total liabilities, minority interest
and shareholders' equity................. $ 99,869.0 $ 94,172.5
__________ __________
__________ __________
Shareholders' equity per common share......... $ 58.76 $ 48.85
__________ __________
__________ __________
<FN>
See Condensed Notes to Financial Statements.
</TABLE>
<PAGE> 6
AETNA LIFE AND CASUALTY COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
(Millions, except share data)
Net
Common Unrealized
Capital Capital Retained Treasury
Six Months Ended June 30, 1995 Total Stock Gains (Losses) Earnings Stock
__________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1994 $ 5,503.0 $ 1,419.2 $(1,071.5) $ 5,259.6 $ (104.3)
__________________________________________________________________________________________________________
Net loss.............................. (136.1) (136.1)
Net change in unrealized capital gains
and losses.......................... 1,416.1 1,416.1
Common stock issued for benefit plans
(562,240 shares)...................... 29.7 29.7
Loss on issuance of treasury stock.... (3.3) (3.3)
Common stock dividends declared....... (156.4) (156.4)
____________________________________________________________________
Balances at June 30, 1995 $ 6,653.0 $ 1,415.9 $ 344.6 $ 4,967.1 $ (74.6)
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
Six Months Ended June 30, 1994
__________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1993 $ 7,043.1 $ 1,422.0 $ 648.2 $ 5,103.3 $ (130.4)
__________________________________________________________________________________________________________
Net income............................ 178.1 178.1
Net change in unrealized capital gains
and losses.......................... (1,035.7) (1,035.7)
Common stock issued for benefit plans
(417,602 shares)...................... 23.8 23.8
Loss on issuance of treasury stock.... (4.2) (4.2)
Common stock dividends declared....... (155.7) (155.7)
____________________________________________________________________
Balances at June 30, 1994 $ 6,049.4 $ 1,417.8 $ (387.5) $ 5,125.7 $ (106.6)
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
<FN>
See Condensed Notes to Financial Statements.
</TABLE>
<PAGE> 7
AETNA LIFE AND CASUALTY COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
June 30,
_________________________
(Millions) 1995 1994
____ ____
<S> <C> <C>
Cash Flows from Operating Activities:
Net income (loss)................................................. $ (136.1) $ 178.1
Adjustments to reconcile net income (loss) to net cash provided by
(used for) operating activities:
Decrease (Increase) in accrued investment income............... 19.4 (.5)
(Increase) Decrease in premiums due and other receivables...... (134.4) 153.1
Increase in reinsurance recoverables and receivables........... (288.7) (254.3)
Increase in deferred policy acquisition costs.................. (83.5) (93.0)
Depreciation and amortization.................................. 75.3 94.3
Increase in federal and foreign income taxes................... (1.0) (326.6)
Net decrease in other assets and other liabilities............. (22.7) (692.3)
Increase in insurance reserve liabilities...................... 910.7 755.9
Net sales of debt trading securities........................... - 52.3
Decrease (Increase) in minority interest....................... 4.1 (22.7)
Net realized capital losses.................................... 32.3 19.3
Amortization of net investment discount........................ (51.7) (51.8)
Other, net..................................................... (64.9) 18.2
_________ _________
Net cash provided by (used for) operating activities......... 258.8 (170.0)
_________ _________
Cash Flows from Investing Activities:
Proceeds from sales of:
Debt securities available for sale............................. 8,596.8 12,258.8
Debt securities held for investment............................ - 5.6
Equity securities.............................................. 768.4 398.9
Mortgage loans................................................. 81.2 67.4
Real estate.................................................... 155.5 316.6
Short-term investments......................................... 30,074.0 30,322.7
Investment repayments of:
Debt securities available for sale............................. 1,041.3 2,125.8
Debt securities held for investment............................ 176.2 330.7
Mortgage loans................................................. 936.6 1,107.8
Cost of investments in:
Debt securities available for sale............................. (10,937.4) (14,799.0)
Debt securities held for investment............................ (7.2) (46.3)
Equity securities.............................................. (348.4) (493.6)
Mortgage loans................................................. (95.6) (159.7)
Real estate.................................................... (83.5) (20.1)
Short-term investments......................................... (30,141.0) (30,444.4)
Increase in property, plant & equipment........................... (82.9) (65.5)
Net (increase) decrease in Separate Accounts...................... (24.8) 4.7
Other, net........................................................ (126.9) 127.5
_________ _________
Net cash (used for) provided by investing activities............ (17.7) 1,037.9
_________ _________
Cash Flows from Financing Activities:
Deposits and interest credited for investment contracts........... 373.2 1,757.9
Withdrawals of investment contracts............................... (1,367.9) (2,342.6)
Issuance of long-term debt........................................ 3.8 65.5
Stock issued under benefit plans.................................. 26.4 19.6
Repayment of long-term debt....................................... (1.8) (93.0)
Net increase in short-term debt................................... 35.6 138.4
Dividends paid to shareholders.................................... (156.4) (155.7)
_________ _________
Net cash used for financing activities.......................... (1,087.1) (609.9)
_________ _________
Effect of exchange rate changes on cash and cash
equivalents....................................................... 43.4 (3.6)
_________ _________
Net (decrease) increase in cash and cash equivalents................. (802.6) 254.4
Cash and cash equivalents, beginning of period....................... 2,953.6 1,557.8
_________ _________
Cash and cash equivalents, end of period............................. $ 2,151.0 $ 1,812.2
_________ _________
_________ _________
Supplemental Cash Flow Information:
Interest paid..................................................... $ 53.6 $ 37.7
_________ _________
_________ _________
Income taxes paid................................................. $ 81.3 $ 18.0
_________ _________
_________ _________
<FN>
See Condensed Notes to Financial Statements.
</TABLE>
<PAGE> 8
AETNA LIFE AND CASUALTY COMPANY AND SUBSIDIARIES
CONDENSED NOTES TO FINANCIAL STATEMENTS
(1) Basis of Presentation
The consolidated financial statements include Aetna Life and
Casualty Company and its majority-owned subsidiaries
(collectively, the "company"). Less than majority-owned entities
in which the company has at least a 20% interest are reported on
the equity basis. These consolidated financial statements have
been prepared in accordance with generally accepted accounting
principles and are unaudited. Certain reclassifications have been
made to 1994 financial information to conform to 1995
presentation. These interim statements necessarily rely heavily
on estimates, including assumptions as to annualized tax rates.
In the opinion of management, all adjustments necessary for a fair
statement of results for the interim periods have been made. All
such adjustments are of a normal, recurring nature.
(2) Future Application of Accounting Standards
In March 1995, the Financial Accounting Standards Board issued
Financial Accounting Standard ("FAS") No. 121, Accounting for
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.
This statement requires write down to fair value when long-lived
assets to be held and used are impaired. The statement also
requires long-lived assets to be disposed of (e.g., real estate
held for sale) to be carried at the lower of cost or fair value
less cost to sell and does not allow such assets to be
depreciated. This statement will be effective for 1996 financial
statements, although earlier adoption is permissible. The company
has not yet determined the timing of adoption of this statement,
however, the impact on earnings is not expected to be material.
(3) Insurance Liabilities
Workers' compensation life table indemnity reserves are discounted
at 5% for voluntary business and 3.5% for involuntary business,
with mortality assumptions that reflect current company and
industry experience. Workers' compensation life table indemnity
reserves totaled $753 million at June 30, 1995, which was 22% of
the total workers' compensation reserves for unpaid claims and
claim adjustment expenses. Certain other property-casualty
reserves with fixed and determinable payment patterns have been
discounted at risk free rates. The aggregate amount of such
discount was approximately $20 million at June 30, 1995.
(4) Discontinued Products
Results of discontinued fully guaranteed large case pension
products (guaranteed investment contracts ("GICs") and single-
premium annuities ("SPAs")) for the three and six months ended
June 30, 1995 and 1994 were charged to the reserve for anticipated
future losses and did not affect the company's results of
operations.
<PAGE> 9
AETNA LIFE AND CASUALTY COMPANY AND SUBSIDIARIES
CONDENSED NOTES TO FINANCIAL STATEMENTS
(Continued)
(4) Discontinued Products (Continued)
Future losses (including capital losses) for each product will be
charged to the respective reserve at the time such losses are
realized. Management believes the reserve for anticipated losses
at June 30, 1995 is adequate to provide for future losses
associated with these products. To the extent that actual future
losses differ from anticipated future losses, the company's
results of operations would be affected. (Please refer to the
company's 1994 Annual Report to Shareholders for a more complete
discussion of the reserve for anticipated future losses on
discontinued products.)
Results of discontinued products were as follows (pretax, in
millions):
<TABLE>
<CAPTION>
(Added to)
Charged to
Guaranteed Single- Reserve for
Investment Premium Future
Three months ended June 30, 1995 Contracts Annuities Total Losses Net*
_____________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Net investment income $ 138.3 $ 112.2 $ 250.5 $ - $ 250.5
Net realized capital gains (losses) (12.6) 14.4 1.8 (1.8) -
Interest earned on receivable
from continuing business 5.1 7.6 12.7 - 12.7
Other income 2.4 3.0 5.4 - 5.4
_____________________________________________________________
Total revenue 133.2 137.2 270.4 (1.8) 268.6
_____________________________________________________________
Current and future benefits 145.1 113.2 258.3 4.4 262.7
Operating expenses 1.9 4.0 5.9 - 5.9
_____________________________________________________________
Total benefits and expenses 147.0 117.2 264.2 4.4 268.6
_____________________________________________________________
Results of discontinued products $ (13.8) $ 20.0 $ 6.2 $ (6.2) $ -
_____________________________________________________________________________________________________
_____________________________________________________________
(Added to)
Charged to
Guaranteed Single- Reserve for
Investment Premium Future
Three months ended June 30, 1994 Contracts Annuities Total Losses Net*
_____________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Premiums $ - $ 5.5 $ 5.5 $ - $ 5.5
Net investment income 156.5 106.9 263.4 - 263.4
Net realized capital losses (31.6) (10.9) (42.5) 42.5 -
Interest earned on receivable
from continuing business 4.9 6.9 11.8 - 11.8
Other income 3.6 3.6 7.2 - 7.2
_____________________________________________________________
Total revenue 133.4 112.0 245.4 42.5 287.9
_____________________________________________________________
Current and future benefits 190.1 112.6 302.7 (15.8) 286.9
Operating expenses .3 .7 1.0 - 1.0
_____________________________________________________________
Total benefits and expenses 190.4 113.3 303.7 (15.8) 287.9
_____________________________________________________________
Results of discontinued products $ (57.0) $ (1.3) $ (58.3) $ 58.3 $ -
_____________________________________________________________________________________________________
_____________________________________________________________
<FN>
* Amounts are reflected in the 1995 and 1994 Consolidated Statements of Income, except for interest
of $12.7 million and $11.8 million for the three months ended June 30, 1995 and 1994, respectively,
earned on the receivable from continuing business which is eliminated in consolidation.
</TABLE>
<PAGE> 10
AETNA LIFE AND CASUALTY COMPANY AND SUBSIDIARIES
CONDENSED NOTES TO FINANCIAL STATEMENTS
(Continued)
(4) Discontinued Products (Continued)
<TABLE>
<CAPTION>
(Added to)
Charged to
Guaranteed Single- Reserve for
Investment Premium Future
Six months ended June 30, 1995 Contracts Annuities Total Losses Net*
_____________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Net investment income $ 270.6 $ 222.3 $ 492.9 $ - $ 492.9
Net realized capital gains (losses) (31.1) 22.4 (8.7) 8.7 -
Interest earned on receivable
from continuing business 10.2 15.2 25.4 - 25.4
Other income 4.9 6.0 10.9 - 10.9
_____________________________________________________________
Total revenue 254.6 265.9 520.5 8.7 529.2
_____________________________________________________________
Current and future benefits 300.3 227.6 527.9 (5.8) 522.1
Operating expenses 1.6 5.5 7.1 - 7.1
_____________________________________________________________
Total benefits and expenses 301.9 233.1 535.0 (5.8) 529.2
_____________________________________________________________
Results of discontinued products $ (47.3) $ 32.8 $ (14.5) $ 14.5 $ -
_____________________________________________________________________________________________________
_____________________________________________________________
(Added to)
Charged to
Guaranteed Single- Reserve for
Investment Premium Future
Six months ended June 30, 1994 Contracts Annuities Total Losses Net*
_____________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Premiums $ - $ 44.7 $ 44.7 $ - $ 44.7
Net investment income 327.5 215.8 543.3 - 543.3
Net realized capital losses (57.1) (26.4) (83.5) 83.5 -
Interest earned on receivable
from continuing business 9.6 13.8 23.4 - 23.4
Other income 6.5 6.4 12.9 - 12.9
_____________________________________________________________
Total revenue 286.5 254.3 540.8 83.5 624.3
_____________________________________________________________
Current and future benefits 392.7 263.9 656.6 (36.4) 620.2
Operating expenses 2.2 1.9 4.1 - 4.1
_____________________________________________________________
Total benefits and expenses 394.9 265.8 660.7 (36.4) 624.3
_____________________________________________________________
Results of discontinued products $ (108.4) $ (11.5) $ (119.9) $ 119.9 $ -
_____________________________________________________________________________________________________
_____________________________________________________________
<FN>
* Amounts are reflected in the 1995 and 1994 Consolidated Statements of Income, except for interest
of $25.4 million and $23.4 million for the six months ended June 30, 1995 and 1994, respectively,
earned on the receivable from continuing business which is eliminated in consolidation.
</TABLE>
Deposits of $7.0 million and $34.3 million for the three months
ended June 30, 1995 and 1994, respectively, and $16.8 million and
$168.5 million were received for the six months ended June 30,
1995 and 1994, respectively, under pre-existing GIC contracts. In
accordance with FAS No. 97, such deposits are not included in
premiums or revenue.
<PAGE> 11
AETNA LIFE AND CASUALTY COMPANY AND SUBSIDIARIES
CONDENSED NOTES TO FINANCIAL STATEMENTS
(Continued)
(4) Discontinued Products (Continued)
Assets and liabilities of discontinued products were as follows
(in millions):
<TABLE>
<CAPTION>
June 30, 1995
_______________________________________
Guaranteed Single-
Investment Premium
Contracts Annuities Total
_______________________________________
<S> <C> <C> <C>
Debt securities available for sale $ 2,658.4 $ 3,462.3 $ 6,120.7
Mortgage loans 2,577.4 1,448.4 4,025.8
Real estate 524.1 176.6 700.7
Short-term and other investments 271.5 146.6 418.1
_______________________________________
Total investments 6,031.4 5,233.9 11,265.3
Current and deferred income taxes 233.1 136.1 369.2
Receivable from continuing
business 419.6 478.3 897.9
Other - 101.6 101.6
_______________________________________
Total assets $ 6,684.1 $ 5,949.9 $12,634.0
______________________________________________________________________________
______________________________________________________________________________
Future policy benefits $ - $ 4,981.7 $ 4,981.7
Policyholders' funds left with
the company 6,223.0 - 6,223.0
Reserve for future losses on
discontinued products 298.3 684.2 982.5
Other 162.8 284.0 446.8
_______________________________________
Total liabilities $ 6,684.1 $ 5,949.9 $12,634.0
______________________________________________________________________________
______________________________________________________________________________
</TABLE>
Net unrealized capital gains as of June 30, 1995 on available for
sale debt securities are included above in other liabilities and
are not reflected in consolidated shareholders' equity. The
reserve for anticipated future losses on GICs is included in
policyholders' funds left with the company and the reserve for
anticipated future losses on SPAs is included in future policy
benefits on the Consolidated Balance Sheet.
At June 30, 1995, estimated future after-tax realized capital
losses of approximately $116 million ($179 million, pretax),
attributable to mortgage loans and real estate supporting GICs,
and $39 million ($60 million, pretax), attributable to mortgage
loans and real estate supporting SPAs were expected to be charged
to the reserve for future losses. Included in the $(31.1) million
and $22.4 million of net realized capital (losses) gains (pretax)
on GICs and SPAs, respectively, for the six months ended June 30,
1995 are (losses) gains from the sale of bonds of $(13.8) million
and $35.5 million, respectively.
<PAGE> 12
AETNA LIFE AND CASUALTY COMPANY AND SUBSIDIARIES
CONDENSED NOTES TO FINANCIAL STATEMENTS
(Continued)
(4) Discontinued Products (Continued)
The activity in the reserve for anticipated future losses on
discontinued products was as follows (pretax, in millions):
<TABLE>
<CAPTION>
6 Months Ended June 30, 1995
___________________________________
Guaranteed Single-
Investment Premium
Contracts Annuities Total
_________________________________________________________________________
<S> <C> <C> <C>
Reserve at beginning of period $ 345.6 $ 651.4 $ 997.0
Gain (Loss) on discontinued products (47.3) 32.8 (14.5)
___________________________________
Reserve at end of period $ 298.3 $ 684.2 $ 982.5
_________________________________________________________________________
___________________________________
</TABLE>
At the time of discontinuance, a receivable from continuing
products was established for each discontinued product equivalent
to the net present value of the anticipated cash flow shortfalls.
The receivables will be funded from invested assets supporting
Large Case Pensions and accrue interest at the discount rates used
to calculate the loss on discontinuance until the receivable is
funded. The offsetting payable established in continuing products
will similarly accrue interest, generally offsetting the
investment income on the assets available to fund the shortfalls.
These amounts are eliminated in consolidation and are therefore
not reflected on the Consolidated Balance Sheet. At June 30, 1995
no funding had taken place. The activity in the receivable from
continuing business was as follows (pretax, in millions):
<TABLE>
<CAPTION>
6 Months Ended June 30, 1995
___________________________________
Guaranteed Single-
Investment Premium
Contracts Annuities Total
____________________________________________________________________________
<S> <C> <C> <C>
Receivable at beginning of period $ 409.4 $ 463.1 $ 872.5
Interest earned 10.2 15.2 25.4
___________________________________
Receivable at end of period $ 419.6 $ 478.3 $ 897.9
____________________________________________________________________________
___________________________________
</TABLE>
Pursuant to a segmentation plan approved in 1983 by the New York
Insurance Department, the combined assets supporting discontinued
products were segregated coincident with the receipt of premiums
and deposits on the discontinued products. Assets of the
discontinued products were distinguished physically, operationally
and for financial reporting purposes, from the remaining assets of
the company.
Management believes the timing and amount of cash flows with
respect to the discontinued products have been estimated with
reasonable accuracy, and the financial statements reflect
management's best estimate of the most likely cash flows that will
occur. However, future periods may include a charge or benefit
equal to the present value of the differences, if any, between
future projected cash flows and current estimates.
<PAGE> 13
AETNA LIFE AND CASUALTY COMPANY AND SUBSIDIARIES
CONDENSED NOTES TO FINANCIAL STATEMENTS
(Continued)
(5) Intent to Sell Subsidiary
As of June 30, 1995, the company intends to sell its subsidiary,
Aetna Re-Insurance Company (U.K.) Ltd., and accordingly, the
subsidiary has been written down to estimated fair market value.
A realized capital loss of $22.5 million (after-tax) is included
in net realized capital losses in the Consolidated Statements of
Income for the three and six months ended June 30, 1995.
(6) Investments
Net investment income includes amounts allocable to experience
rated contractholders of $367.9 million and $368.9 million for the
three months ended June 30, 1995 and 1994, respectively, and
$728.7 million and $729.8 million for the six months ended June
30, 1995 and 1994, respectively. Interest credited to
contractholders is included in current and future benefits.
Net realized capital gains (losses) allocable to experience rated
contractholders of $30.1 million and $(37.7) million for the three
months ended June 30, 1995 and 1994, respectively, and $7.3
million and $(71.6) million for the six months ended June 30, 1995
and 1994, respectively, were deducted from net realized capital
losses reflected on the Consolidated Statements of Income, and an
offsetting amount is reflected on the Consolidated Balance Sheets
in policyholders' funds left with the company.
As of January 1, 1995, the company adopted FAS No. 114, Accounting
by Creditors for Impairment of a Loan and FAS No. 118, Accounting
by Creditors for Impairment of a Loan - Income Recognition and
Disclosures. In accordance with these standards, a loan is
considered impaired when it is probable that the company will be
unable to collect amounts due according to the contractual terms
of the loan agreement. For impaired loans, a specific impairment
reserve is established for the difference between the recorded
investment in the mortgage loan and the fair value of the
collateral. General reserves are established for losses management
believes are likely to arise from the overall portfolio but cannot
be attributed to specific loans. Prior to the adoption of FAS
Nos. 114 and 118, the company included the reserve for estimated
losses on potential problem loans (other than those allocable to
experience rated products) which management believed were likely
to become classified as problem or restructured in the next 12
months or so in the general reserve.
At June 30, 1995, the total recorded investment in loans that are
considered to be impaired (which include problem loans,
restructured loans and potential problem loans) under FAS No. 114
and related specific reserves are presented in the table below.
Included in the total recorded investment are impaired loans of
$443 million for which no specific reserves are considered
necessary.
<PAGE> 14
AETNA LIFE AND CASUALTY COMPANY AND SUBSIDIARIES
CONDENSED NOTES TO FINANCIAL STATEMENTS
(Continued)
(6) Investments (continued)
<TABLE>
<CAPTION>
Total
Recorded Specific
(Millions) Investment Reserves
_________________________________________________________________________
<S> <C> <C>
Supporting discontinued products $ 979.5 $ 239.8
Supporting experience rated products 753.2 201.7
Supporting remaining products 650.1 163.2
___________________________
Total Impaired Loans $ 2,382.8 $ 604.7
_________________________________________________________________________
___________________________
</TABLE>
The activity in the specific and general reserves as of June 30,
1995 is summarized below:
<TABLE>
<CAPTION>
General
Reserve
Allocated to Charged Balance
Balance at Experience Balance at to net Charged at
December 31, 1994 Rated December 31, 1994, realized to other Principal June 30,
(Millions) as reported Products (1) as adjusted loss accounts Write-offs 1995
___________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C>
Supporting
discontinued
products $ 372.1 $ - $ 372.1 $ - $ 25.1 (2) $ (70.0) $ 327.2
Supporting
experience
rated
products 156.1 208.5 364.6 - 7.4 (2) (40.5) 331.5
Supporting
remaining
products 255.9 - 255.9 8.8 - (20.8) 243.9
______________________________________________________________________________________________
Total $ 784.1 $ 208.5 $ 992.6 $ 8.8 $ 32.5 $ (131.3) $ 902.6
___________________________________________________________________________________________________________
______________________________________________________________________________________________
Specific
Reserves $ 434.1 $ - $ 434.1 $ 7.9 $ 294.0 (3) $ (131.3) $ 604.7
General
Reserve 350.0 208.5 558.5 0.9 (261.5)(3) - 297.9
______________________________________________________________________________________________
Total $ 784.1 $ 208.5 $ 992.6 $ 8.8 $ 32.5 $ (131.3) $ 902.6
___________________________________________________________________________________________________________
______________________________________________________________________________________________
<FN>
(1) The general reserve at December 31, 1994 excluded reserves of $208.5 million related to experience
rated products.
(2) Reflects additions to reserves related to assets supporting experience rated products and
discontinued products which do not affect the company's results of operations.
(3) $261.5 million of general reserve related to performing loans at December 31, 1994 were reclassified
to specific reserves as a result of the adoption of FAS No. 114.
</TABLE>
<PAGE> 15
AETNA LIFE AND CASUALTY COMPANY AND SUBSIDIARIES
CONDENSED NOTES TO FINANCIAL STATEMENTS
(Continued)
(6) Investments (Continued)
The company accrues interest income on impaired loans to the
extent it is deemed collectible and the loan continues to perform
under its original or restructured contractual terms. Interest
income on problem loans is generally recognized on a cash basis.
Cash payments on loans in the process of foreclosure are generally
treated as a return of principal.
Income earned (pretax) and received on the average recorded
investment in impaired loans for the three and six months ended
June 30, 1995, was as follows:
<TABLE>
<CAPTION>
Three Months Ended June 30, 1995 Six Months Ended June 30, 1995
________________________________ ______________________________
Average Average
Impaired Income Income Impaired Income Income
(Millions) Loans Earned Received Loans Earned Received
_______________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Supporting discontinued products $ 1,009.5 $ 21.3 $ 21.7 $ 1,011.8 $ 39.7 $ 39.2
Supporting experience rated products 734.5 13.2 13.7 741.0 26.2 26.6
Supporting remaining products 673.1 9.2 9.3 668.0 17.5 18.1
_________________________________________________________________
Total $ 2,417.1 $ 43.7 $ 44.7 $ 2,420.8 $ 83.4 $ 83.9
_______________________________________________________________________________________________________
_________________________________________________________________
</TABLE>
(7) Federal and Foreign Income Taxes
Net unrealized capital gains and losses are presented in
shareholders' equity net of deferred taxes. During the six months
ended June 30, 1995, the company moved from a net unrealized capital
loss position of $1,071.5 million at December 31, 1994, to a net
unrealized capital gain position of $344.6 million at June 30, 1995,
primarily due to decreases in interest rates. As a result, all
valuation allowances previously established related to deferred tax
assets on these capital losses were reversed, which had no impact on
net income for the three and six months ended June 30, 1995.
(8) Reinsurance
Ceded earned premiums were $.2 billion and $.3 billion for the
three months ended June 30, 1995 and 1994, respectively, and $.5
billion and $.6 billion for the six months ended June 30, 1995 and
1994, respectively. Ceded current and future benefits were $.3
billion for the three months ended June 30, 1995 and 1994 and $.6
billion and $.7 billion for the six months ended June 30, 1995 and
1994, respectively.
<PAGE> 16
AETNA LIFE AND CASUALTY COMPANY AND SUBSIDIARIES
CONDENSED NOTES TO FINANCIAL STATEMENTS
(Continued)
(9) Debt
The company has credit facilities aggregating $1 billion with a
group of worldwide banks. One $500 million facility terminates in
July 1999. Another $500 million facility was scheduled to expire
in July 1995, however, the company extended the maturity of this
credit facility to July 1996. Various interest rate options are
available under each facility and any borrowings mature on the
expiration date of the applicable credit commitment. The company
pays facility fees ranging from .08% to .375% per annum under the
short-term credit agreement and from .1% to .5% per annum under
the medium-term credit agreement, depending upon the company's
long-term senior unsecured debt rating. The commitments require
the company to maintain shareholders' equity, excluding net
unrealized capital gains and losses, of at least $5.0 billion.
These facilities also support the company's commercial paper
borrowing program.
Pursuant to shelf registration statements declared effective by
the Securities and Exchange Commission ("SEC") the company may
offer and sell up to an additional $550 million of various types
of securities.
A subsidiary of the company may offer and sell up to an additional
$225 million of preferred securities under a shelf registration
statement declared effective by the SEC.
<PAGE> 17
AETNA LIFE AND CASUALTY COMPANY AND SUBSIDIARIES
CONDENSED NOTES TO FINANCIAL STATEMENTS
(Continued)
(10) Off-Balance-Sheet Financial Instruments
(Including Derivative Financial Instruments)
The company engages in hedging activities to manage foreign
exchange and interest rate risk. Such hedging activities have
principally consisted of using off-balance-sheet instruments
including foreign exchange forward contracts, futures and forward
contracts, and interest rate swap agreements. (Please see General
Account Investments - Use of Derivatives and Other Investments on
pages 41 and 42 of the Management's Discussion and Analysis of
Financial Condition and Results of Operations and Note 18 of the
company's 1994 Annual Report to Shareholders for a description of
the company's hedging activities). The notional amounts, carrying
values and estimated fair values of the company's off-balance-
sheet financial instruments are as follows (in millions):
<TABLE>
<CAPTION>
Carrying
Value
Notional Asset Fair
June 30, 1995 Amount (Liability) Value
_______________________________________________________________________________
<S> <C> <C> <C>
Foreign exchange forward contracts - sell:
Related to net investments in foreign
affiliates $ 229.1 $ (4.1) $ (6.3)
Related to investments in non-dollar
denominated assets 205.0 (1.1) (1.1)
Foreign exchange forward contracts - buy:
Related to net investments in foreign
affiliates 29.9 6.2 4.1
Related to investments in non-dollar
denominated assets 25.2 .4 .4
Futures contracts to purchase investments 95.4 .2 (.2)
Futures contracts to sell investments 133.0 - -
Interest rate swaps:
Unrecognized gains 423.0 - 22.3
Unrecognized losses 380.0 - (14.2)
Forward swap agreement 100.0 - .2
Carrying
Value
Notional Asset Fair
December 31, 1994 Amount (Liability) Value
_______________________________________________________________________________
<S> <C> <C> <C>
Foreign exchange forward contracts - sell:
Related to net investments in foreign
affiliates $ 497.8 $ (2.5) $ (4.7)
Related to investments in non-dollar
denominated assets 266.9 (.8) (1.6)
Foreign exchange forward contracts - buy:
Related to net investments in foreign
affiliates 48.5 5.2 4.8
Related to investments in non-dollar
denominated assets 40.9 .1 .2
Futures contracts to purchase investments 122.5 (.1) .1
Forward contracts to purchase investments 5.6 - -
Interest rate swaps:
Unrecognized gains 429.4 - 20.7
Unrecognized losses 386.4 - (18.3)
</TABLE>
<PAGE> 18
AETNA LIFE AND CASUALTY COMPANY AND SUBSIDIARIES
CONDENSED NOTES TO FINANCIAL STATEMENTS
(Continued)
(11) Supplemental Cash Flow Information
Significant non-cash investing and financing activities include
acquisition of real estate through foreclosures (including in-
substance foreclosures) of mortgage loans amounting to $144
million and $149 million for the six months ended June 30, 1995
and 1994, respectively.
(12) Earnings Per Share
Earnings per share are computed using net income divided by the
weighted average number of common shares outstanding, (including
common share equivalents in 1994). There is not a significant
difference between primary and fully diluted earnings per share.
(13) Commitments and Contingent Liabilities
Environmental and Asbestos-Related Claims
Reserving for environmental and asbestos-related claims is subject
to significant uncertainties.
However, in recent years, developments have occurred inside and
outside of the company which have enabled the company to continue
to better estimate environmental liabilities. These developments
led the company to initiate a comprehensive environmental
reserving review in early 1995 which was concluded at the end of
the second quarter of 1995. Upon completing its reserving review,
the company added $750 million (pretax)($487.5 million, after-tax)
to environmental-related claims reserves in the second quarter of
1995, resulting in a total reserve for environmental-related
liabilities of $1,187 million, before reinsurance of $100 million
(net of an allowance of $16 million for reinsurance considered to
be uncollectible) and net of discount on environmental
settlements, at June 30, 1995.
In the opinion of management, the company's reserves for
environmental-related claims at June 30, 1995 represent the
company's best estimate of its ultimate environmental-related
liability, based on currently known facts, current law (including
Superfund), current technology, and assumptions considered
reasonable where facts are not known. Due to the significant
uncertainties and related management judgment involved in
estimating the company's environmental liability, no assurances
can be given that the environmental reserve represents the amount
that will ultimately be paid by the company for all environmental-
related losses. The amount ultimately paid could differ
materially from the company's currently recorded reserve as legal
and factual issues are clarified, but any difference cannot be
reasonably estimated at this time.
<PAGE> 19
AETNA LIFE AND CASUALTY COMPANY AND SUBSIDIARIES
CONDENSED NOTES TO FINANCIAL STATEMENTS
(Continued)
(13) Commitments and Contingent Liabilities (Continued)
In addition, the company has purchased reinsurance protection
which could be available to reduce the statutory surplus effects
of additional environmental reserve development. The reinsurance
provides aggregate protection of $335 million for adverse loss
development beyond reserves held (net of existing reinsurance) at
June 30, 1995 for environmental, asbestos, certain general
liability and workers' compensation claims, occurring prior to
January 1, 1995 ($6.9 billion). Under this arrangement, $165
million of the existing reserves for such losses have been ceded.
This is a retroactive contract and the earnings benefits of any
future recoveries arising under this arrangement would be
accounted for as such under FAS No. 113 (i.e., at a discounted
value). Because of the length of time between the recording of
any reinsurance recoverable and its ultimate payment, the initial
benefit of any recovery could be substantially less than the
amount of reserve development.
Environmental and asbestos-related loss and loss adjustment
expense reserves, as reflected on the Consolidated Balance Sheet,
were as follows (before reinsurance and net of discount on
environmental settlements, in millions):
<TABLE>
<CAPTION>
June 30,
1995
___________________________________________________
<S> <C>
Environmental Liability $ 1,187.0
Asbestos Bodily Injury 322.2
Asbestos Property Damage 23.0
__________
Total Environmental and
Asbestos-Related Reserves $ 1,532.2
___________________________________________________
__________
</TABLE>
<PAGE> 20
AETNA LIFE AND CASUALTY COMPANY AND SUBSIDIARIES
CONDENSED NOTES TO FINANCIAL STATEMENTS
(Continued)
(14) Litigation
The company is continuously involved in numerous lawsuits arising,
for the most part, in the ordinary course of its business
operations either as a liability insurer defending third-party
claims brought against its insureds or as an insurer defending
coverage claims brought against itself, including lawsuits related
to issues of policy coverage and judicial interpretation. One
such area of coverage litigation involves legal liability for
environmental and asbestos-related claims. These lawsuits and
other factors make reserving for these claims subject to
significant uncertainties.
While the ultimate outcome of such litigation cannot be determined
at this time, such litigation net of reserves established
therefore and giving effect to reinsurance probable of recovery,
is not expected to result in judgments for amounts material to the
financial condition of the company, although it may adversely
affect results of operations in future periods.
<PAGE> 21
Independent Auditors' Review Report
The Board of Directors
Aetna Life and Casualty Company:
We have reviewed the accompanying condensed consolidated balance
sheet of Aetna Life and Casualty Company and Subsidiaries as of
June 30, 1995, and the related condensed consolidated statements
of income for the three-month and six-month periods ended June 30,
1995 and 1994, and the related condensed consolidated statements
of shareholders' equity and cash flows for the six-month periods
ended June 30, 1995 and 1994. These condensed consolidated
financial statements are the responsibility of the company's
management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly,
we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the accompanying condensed
consolidated financial statements for them to be in conformity
with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Aetna Life
and Casualty Company and Subsidiaries as of December 31, 1994, and
the related consolidated statements of income, shareholders'
equity, and cash flows for the year then ended (not presented
herein); and in our report dated February 7, 1995, we expressed an
unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 31, 1994, is
fairly presented, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
/s/ KPMG PEAT MARWICK LLP
Hartford, Connecticut
July 27, 1995
<PAGE> 22
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Consolidated Results of Operations
__________________________________
<TABLE>
<CAPTION>
Operating Summary
(Millions, except per share data) Three Months Ended June 30, Six Months Ended June 30,
________________________________ ________________________________
1995 1994 % Change 1995 1994 % Change
____ ____ ________ ____ ____ ________
<S> <C> <C> <C> <C> <C> <C>
Premiums............................. $ 2,825.7 $ 2,839.0 (.5)% $ 5,754.7 $ 5,581.3 3.1%
Net investment income................ 1,140.6 1,121.0 1.7 2,226.5 2,247.5 (.9)
Fees and other income................ 506.7 465.8 8.8 982.7 926.4 6.1
Net realized capital losses.......... (25.9) (13.4) (93.3) (32.3) (19.3) (67.4)
_________ _________ _________ _________
Total revenue.................... 4,447.1 4,412.4 .8 8,931.6 8,735.9 2.2
Current and future benefits.......... 3,767.4 3,114.5 21.0 6,889.8 6,232.1 10.6
Operating expenses................... 962.0 924.5 4.1 1,897.0 1,882.0 .8
Amortization of deferred policy
acquisition costs................... 196.6 185.2 6.2 383.8 377.2 1.7
_________ _________ _________ _________
Total benefits and expenses...... 4,926.0 4,224.2 16.6 9,170.6 8,491.3 8.0
_________ _________ _________ _________
Income (loss) before income taxes.... (478.9) 188.2 - (239.0) 244.6 -
Income taxes (benefits).............. (182.0) 55.8 - (102.9) 66.5 -
_________ _________ _________ _________
Net income (loss)................ $ (296.9) $ 132.4 - $ (136.1) $ 178.1 -
_________ _________ _________ _________
_________ _________ _________ _________
Net realized capital losses,
net of tax (included above)......... $ (12.5) $ (8.0) (56.3) $ (19.5) $ (15.5) (25.8)
_________ _________ _________ _________
_________ _________ _________ _________
Net income (loss) per common share... $ (2.62) $ 1.17 - $ (1.20) $ 1.58 -
_________ _________ _________ _________
_________ _________ _________ _________
</TABLE>
Overview
________
The company reported net losses of $297 million and $136 million
for the three and six months ended June 30, 1995, respectively,
compared with net income of $132 million and $178 million for the
same periods a year ago. The company's earnings (after-tax)
adjusted for additions to environmental-related claims reserves
(please see "Property-Casualty - Property-Casualty Reserves" on
page 33) and net realized capital losses follow (in millions):
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
___________________________ _________________________
1995 1994 1995 1994
____ ____ ____ ____
<S> <C> <C> <C> <C>
Net income (loss)............................ $(296.9) $ 132.4 $(136.1) $ 178.1
Less:
Additions to environmental-related
claims reserves......................... (487.5) (76.8) (505.7) (97.6)
Net realized capital losses............... (12.5) (8.0) (19.5) (15.5)
_______ _______ _______ _______
Adjusted earnings............................ $ 203.1 $ 217.2 $ 389.1 $ 291.2
_______ _______ _______ _______
_______ _______ _______ _______
</TABLE>
The company's adjusted earnings decreased $14 million and increased
$98 million for the three and six months ended June 30, 1995,
respectively, as compared with the same periods in 1994. The
following significant factors impact the comparison of adjusted
earnings:
Catastrophe losses (after-tax and net of reinsurance) for the
three and six months ended June 30, 1995 were $25 million and $38
million, respectively, compared with $29 million and $153 million,
respectively, for the same periods a year ago. Catastrophe losses
for the six months ended June 30, 1994 related primarily to the
Los Angeles earthquake and the severe winter weather.
<PAGE> 23
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Overview (Continued)
____________________
Reductions of prior year loss reserves in the personal auto
business of $54 million and $59 million (after-tax) for the three
and six months ended June 30, 1994, respectively.
Results in 1995 also reflected increased operating expenses in the
health care business, as a result of the migration of customers
from the traditional health care products to the more resource-
intensive managed care business and the company's increased
investment in managed care, and in the Aetna Life Insurance &
Annuity segment as a result of continued business growth and costs
associated with the implementation of a new contract
administration system. Partially offsetting these increases in
operating expenses are overall reductions due to actions taken by
management in prior years to lower costs.
Net Realized Capital Gains and Losses
Net realized after-tax capital gains and losses included in net
income, allocable to experience rated pension contractholders, and
supporting discontinued products were as follows (in millions):
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
___________________________ _________________________
1995 1994 1995 1994
____ ____ ____ ____
<S> <C> <C> <C> <C>
Net realized capital gains (losses)
from sales................................. $ (19.2) $ 12.2 $ (22.1) $ 27.4
Realized capital gains (losses)
from changes in reserves for mortgage
loans and real estate...................... 6.7 (19.8) 2.6 (42.0)
Realized capital losses from write-downs
of debt and equity securities.............. - (.4) - (.9)
_______ _______ _______ _______
Net realized capital losses from
remaining products......................... $ (12.5) $ (8.0) $ (19.5) $ (15.5)
_______ _______ _______ _______
_______ _______ _______ _______
Net realized capital gains (losses)
allocable to experience rated pension
contractholders (excluded above)........... $ 30.1 $ (37.7) $ 7.3 $ (71.6)
_______ _______ _______ _______
_______ _______ _______ _______
Net realized capital gains (losses)
on assets supporting discontinued
products (excluded above).................. $ 1.2 $ (27.6) $ (5.6) $ (54.3)
_______ _______ _______ _______
_______ _______ _______ _______
</TABLE>
Net realized capital losses from sales for the three and six
months ended June 30, 1995 include $23 million resulting from the
write-down to estimated fair market value of the company's
investment in a consolidated subsidiary, Aetna Re-Insurance
Company (U.K.) Ltd., which it intends to sell. Net realized
capital gains from sales for the six months ended June 30, 1994
include a $14 million gain resulting from the sale of a portion of
an unconsolidated subsidiary.
Strategic Outlook
The company continues to review its Property-Casualty and other
businesses and assess their potential for contribution to the
company's long-term strategic and financial objectives.
<PAGE> 24
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Aetna Health Plans
__________________
<TABLE>
<CAPTION>
Operating Summary
(Millions) Three Months Ended June 30, Six Months Ended June 30,
________________________________ ______________________________
1995 1994 % Change 1995 1994 % Change
____ ____ ________ ____ ____ ________
<S> <C> <C> <C> <C> <C> <C>
Premiums............................ $ 1,461.8 $ 1,429.7 2.2% $ 2,956.5 $ 2,756.6 7.3%
Net investment income............... 96.5 85.2 13.3 181.2 169.4 7.0
Fees and other income............... 336.1 299.6 12.2 643.6 597.8 7.7
Net realized capital gains (losses). (5.9) 1.4 - (10.1) (17.4) 42.0
_________ _________ _________ _________
Total revenue.................... 1,888.5 1,815.9 4.0 3,771.2 3,506.4 7.6
Current and future benefits......... 1,273.1 1,202.8 5.8 2,546.4 2,311.9 10.1
Operating expenses.................. 498.9 457.1 9.1 983.9 908.8 8.3
Amortization of deferred policy
acquisition costs.................. 6.4 7.3 (12.3) 13.2 14.7 (10.2)
_________ _________ _________ _________
Total benefits and expenses...... 1,778.4 1,667.2 6.7 3,543.5 3,235.4 9.5
_________ _________ _________ _________
Income before income taxes.......... 110.1 148.7 (26.0) 227.7 271.0 (16.0)
Income taxes........................ 40.6 54.7 (25.8) 84.6 99.6 (15.1)
_________ _________ _________ _________
Net income.......................... $ 69.5 $ 94.0 (26.1) $ 143.1 $ 171.4 (16.5)
_________ _________ _________ _________
_________ _________ _________ _________
Net realized capital gains (losses),
net of tax (included above)........ $ (3.5) $ .8 - $ (6.3) $ (11.2) 43.8
_________ _________ _________ _________
_________ _________ _________ _________
Self-funded benefit payments
administered for customers other
than Medicare...................... $ 3,204.9 $ 3,046.1 5.2 $ 6,412.9 $ 6,037.7 6.2
_________ _________ _________ _________
_________ _________ _________ _________
Benefit payments administered for
Medicare........................... $ 3,462.1 $ 3,267.6 6.0 $ 6,912.6 $ 6,517.3 6.1
_________ _________ _________ _________
_________ _________ _________ _________
</TABLE>
Aetna Health Plans' net income for the three and six months ended
June 30, 1995 decreased by $25 million and $28 million,
respectively, compared with the same periods a year ago.
Excluding net realized capital gains and losses, results for the
three and six months ended June 30, 1995 decreased $20 million and
$33 million, respectively, from the prior year.
Second quarter and year-to-date 1995 results reflected unfavorable
medical claim experience (included in current and future benefits)
reflecting an increase in medical trend (utilization and costs of
medical care) in indemnity and preferred provider lines of
business and increased operating expenses. The growth in
operating expenses is primarily attributable to the migration of
customers from the traditional health care products to the more
resource-intensive managed care business, investments in managed
care-related systems and the development of primary care physician
practices. These increased expenses are consistent with the
company's continued focus on a strategy for investing in managed
care. In addition, year-to-date results in 1994 included $8
million (after-tax) of non-recurring benefits from the settlement
of a lawsuit and the termination of an HMO management contract.
<PAGE> 25
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Aetna Health Plans (Continued)
______________________________
Premiums and fees and other income increased 4% and 7% during the
three and six months ended June 30, 1995 compared with the same
periods in 1994, primarily resulting from growth in covered
members, price increases and a movement toward higher revenue
products, such as point-of-service and health maintenance
organizations.
The number of members covered under health care arrangements was
15.7 million and 15.6 million at June 30, 1995 and December 31,
1994, respectively. The number of managed care members was 7.8
million and 7.0 million at June 30, 1995 and December 31, 1994,
respectively. Included in the number of members at June 30, 1995
and December 31, 1994 were approximately .7 million members
covered under a contract with the Civilian Health and Military
Program of the Uniformed Services ("Champus"). Champus has
awarded renewal of the contract to another provider and the
company has filed a protest with the General Accounting Office
concerning the process by which the contract was awarded. Even if
loss of the contract occurs, the company would remain the primary
provider until 1996.
<PAGE> 26
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Aetna Life Insurance & Annuity
______________________________
<TABLE>
<CAPTION>
Operating Summary
(Millions) Three Months Ended June 30, Six Months Ended June 30,
__________________________________ __________________________________
1995 1994 % Change 1995 1994 % Change
____ ____ ________ ____ ____ ________
<S> <C> <C> <C> <C> <C> <C>
Premiums............................ $ 49.6 $ 38.7 28.2% $ 92.0 $ 74.7 23.2%
Net investment income............... 258.1 240.2 7.5 503.6 480.6 4.8
Fees and other income............... 87.1 78.0 11.7 171.1 156.4 9.4
Net realized capital gains (losses). 6.2 (1.7) - 9.2 (4.7) -
_________ _________ _________ _________
Total revenue.................... 401.0 355.2 12.9 775.9 707.0 9.7
Current and future benefits......... 248.9 227.2 9.6 478.0 446.7 7.0
Operating expenses.................. 73.6 59.7 23.3 143.7 119.2 20.6
Amortization of deferred policy
acquisition costs.................. 9.5 6.4 48.4 21.0 20.5 2.4
_________ _________ _________ _________
Total benefits and expenses...... 332.0 293.3 13.2 642.7 586.4 9.6
_________ _________ _________ _________
Income before income taxes.......... 69.0 61.9 11.5 133.2 120.6 10.4
Income taxes........................ 22.5 20.6 9.2 43.2 39.8 8.5
_________ _________ _________ _________
Net income.......................... $ 46.5 $ 41.3 12.6 $ 90.0 $ 80.8 11.4
_________ _________ _________ _________
_________ _________ _________ _________
Net realized capital gains (losses),
net of tax (included above)........ $ 4.1 $ (1.0) - $ 6.0 $ (3.0) -
_________ _________ _________ _________
_________ _________ _________ _________
Deposits not included in premiums
above (1).......................... $ 929.1 $ 828.3 12.2 $ 1,850.2 $ 1,670.1 10.8
_________ _________ _________ _________
_________ _________ _________ _________
<FN>
(1) Under Financial Accounting Standard No. 97, certain deposits are not included in premiums or revenue.
</TABLE>
Aetna Life Insurance & Annuity's net income for the three and six
months ended June 30, 1995 increased $5 million and $9 million,
respectively, from the same periods a year ago. Excluding net
realized capital gains and losses, results for the three and six
months ended June 30, 1995 remained level compared with the same
periods a year ago.
Second quarter and year-to-date results in 1995 reflected an
increase in fees assessed against policyholders and increased net
investment income related to the growth in assets under management
offset by an increase in operating expenses. The increase in
operating expenses primarily reflects continued business growth
and costs associated with the implementation of a new contract
administration system.
Assets under management were $23.1 billion and $18.8 billion, at
June 30, 1995 and 1994, respectively. Included in assets under
management are net unrealized capital gains of $570 million and
unrealized capital losses of $120 million at June 30, 1995 and
1994, respectively.
<PAGE> 27
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Large Case Pensions
___________________
<TABLE>
<CAPTION>
Operating Summary
(Millions) Three Months Ended June 30, Six Months Ended June 30,
________________________________ ______________________________
1995 1994 % Change 1995 1994 % Change
____ ____ ________ ____ ____ ________
<S> <C> <C> <C> <C> <C> <C>
Premiums........................... $ 58.8 $ 43.3 35.8% $ 183.2 $ 100.2 82.8%
Net investment income.............. 477.3 509.7 (6.4) 945.5 1,014.7 (6.8)
Fees and other income.............. 33.0 31.2 5.8 68.1 63.3 7.6
Net realized capital gains (losses) 13.6 (4.5) - 5.9 (14.0) -
_________ _________ _________ _________
Total revenue................... 582.7 579.7 .5 1,202.7 1,164.2 3.3
Current and future benefits........ 519.2 543.8 (4.5) 1,100.3 1,098.4 .2
Operating expenses................. 22.5 21.6 4.2 43.1 44.4 (2.9)
_________ _________ _________ _________
Total benefits and expenses..... 541.7 565.4 (4.2) 1,143.4 1,142.8 .1
_________ _________ _________ _________
Income before income taxes......... 41.0 14.3 186.7 59.3 21.4 177.1
Income taxes....................... 12.3 2.9 - 19.3 3.4 -
_________ _________ _________ _________
Net income......................... $ 28.7 $ 11.4 151.8 $ 40.0 $ 18.0 122.2
_________ _________ _________ _________
_________ _________ _________ _________
Net realized capital gains (losses),
net of tax (included above)...... $ 8.8 $ (2.9) - $ 3.8 $ (8.9) -
_________ _________ _________ _________
_________ _________ _________ _________
Deposits not included in premiums
above (1)........................ $ 482.7 $ 464.5 3.9 $ 909.7 $ 1,117.8 (18.6)
_________ _________ _________ _________
_________ _________ _________ _________
<FN>
(1) Under Financial Accounting Standard No. 97, certain deposits are not included in premiums or revenue.
</TABLE>
Large Case Pensions' net income for the three and six months ended
June 30, 1995 increased by $17 million and $22 million,
respectively, compared with the same periods a year ago.
Excluding net realized capital gains and losses, results for the
three and six months ended June 30, 1995 increased $6 million and
$9 million, respectively, from the prior year.
Results for the three and six months ended June 30, 1995 primarily
reflected an increase in fees and other income and in net interest
margins.
The increase in year-to-date 1995 premiums primarily related to
additional premiums from existing contractholders and did not have
a material effect on results.
Assets under management were $46.9 billion and $48.6 billion, at
June 30, 1995 and 1994, respectively. Included in assets under
management are net unrealized capital gains of $391 million and
net unrealized capital losses of $277 million at June 30, 1995 and
1994, respectively.
<PAGE> 28
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Large Case Pensions (Continued)
_______________________________
Experience rated contractholder and participant withdrawals and
transfers were as follows (excluding contractholder transfers to
other company products) (in millions):
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
____________________________ __________________________
1995 1994 1995 1994
____ ____ ____ ____
<S> <C> <C> <C> <C>
Scheduled contract maturities
and benefit payments: (1)......... $ 235.7 $ 261.6 $ 506.0 $ 501.9
________ ________ ________ ________
________ ________ ________ ________
Contractholder withdrawals other
than scheduled contract maturities
and benefit payments.............. $ 91.0 $ 152.3 $ 188.6 $ 312.0
________ ________ ________ ________
________ ________ ________ ________
Participant withdrawals............ $ 43.1 $ 46.9 $ 97.6 $ 108.6
________ ________ ________ ________
________ ________ ________ ________
<FN>
(1) Includes payments made upon contract maturity and other amounts distributed in accordance
with contract schedules.
</TABLE>
The company is exploring sale or other alternatives for certain
portions of its large case pension investment management and
advisory business conducted through its subsidiary, Aeltus
Investment Management, but is no longer considering selling this
subsidiary. Such business contributed $4 million and $7 million to
Large Case Pensions' net income for the three and six months ended
June 30, 1995, respectively, as compared to $3 million and $8
million for the same periods a year ago.
Discontinued Products
Results of discontinued fully guaranteed large case pension
products (guaranteed investment contracts ("GICs") and single-
premium annuities ("SPAs")) for the three and six months ended June
30, 1995 and 1994 were charged to the reserve for anticipated
future losses and did not affect the company's results of
operations. Future losses (including capital losses) for each
product will be charged to the respective reserve at the time such
losses are realized. Management believes the reserve for
anticipated losses at June 30, 1995 is adequate to provide for
future losses associated with these products. To the extent that
actual future losses differ from anticipated future losses, the
company's results of operations would be affected. (Please refer
to the company's 1994 Annual Report to Shareholders for a more
complete discussion of the reserve for anticipated future losses on
discontinued products.)
At the time of discontinuance, a receivable from continuing
products was established for each discontinued product equivalent
to the net present value of the anticipated cash flow shortfalls.
The receivables will be funded from invested assets supporting
Large Case Pensions and accrue interest at the discount rates used
to calculate the loss on discontinuance until the receivable is
funded. The offsetting payable established in continuing products
will similarly accrue interest, generally offsetting the investment
income on the assets available to fund the shortfalls. At June 30,
1995, the receivables from continuing operations were $420 million
and $478 million for GICs and SPAs, respectively, and no funding
had taken place.
<PAGE> 29
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Large Case Pensions (Continued)
_______________________________
Results of discontinued products were as follows (in millions):
<TABLE>
<CAPTION>
Three Months Ended June 30, 1995 Six Months Ended June 30, 1995
________________________________ ______________________________
GICs SPAs Total GICs SPAs Total
____ ____ ________ ____ ____ ________
<S> <C> <C> <C> <C> <C> <C>
Negative interest margin (1).......... $ (4.4) $ (.6) $ (5.0) $ (19.3) $ (3.4) $ (22.7)
Net realized capital gains (losses)... (8.2) 9.4 1.2 (20.2) 14.6 (5.6)
Interest earned on receivable from
continuing operations............... 3.3 4.9 8.2 6.6 9.9 16.5
Other, net............................ (.4) .1 (.3) .7 1.7 2.4
________ ________ ________ ________ ________ ________
Results of discontinued products,
after-tax........................... $ (9.7) $ 13.8 $ 4.1 $ (32.2) $ 22.8 $ (9.4)
________ ________ ________ ________ ________ ________
________ ________ ________ ________ ________ ________
Results of discontinued products,
pretax............................... $ (13.8) $ 20.0 $ 6.2 $ (47.3) $ 32.8 $ (14.5)
________ ________ ________ ________ ________ ________
________ ________ ________ ________ ________ ________
Net realized capital gains (losses)
from sales of bonds, after-tax,
included above....................... $ (3.3) $ 13.7 $ 10.4 $ (9.0) $ 23.1 $ 14.1
________ ________ ________ ________ ________ ________
________ ________ ________ ________ ________ ________
Three Months Ended June 30, 1994 Six Months Ended June 30, 1994
________________________________ ______________________________
GICs SPAs Total GICs SPAs Total
____ ____ ________ ____ ____ ________
<S> <C> <C> <C> <C> <C> <C>
Negative interest margin (1).......... $ (21.9) $ (.1) $ (22.0) $ (42.4) $ (2.2) $ (44.6)
Net realized capital losses........... (20.5) (7.1) (27.6) (37.1) (17.2) (54.3)
Interest earned on receivable from
continuing operations............... 3.1 4.5 7.6 6.2 9.0 15.2
Other, net............................ 2.8 4.0 6.8 3.4 5.1 8.5
________ ________ ________ ________ ________ ________
Results of discontinued products,
after-tax........................... $ (36.5) $ 1.3 $ (35.2) $ (69.9) $ (5.3) $ (75.2)
________ ________ ________ ________ ________ ________
________ ________ ________ ________ ________ ________
Results of discontinued products,
pretax.............................. $ (57.0) $ (1.3) $ (58.3) $ (108.4) $ (11.5) $ (119.9)
________ ________ ________ ________ ________ ________
________ ________ ________ ________ ________ ________
Net realized capital losses from
sales of bonds, after-tax,
included above....................... $ (18.8) $ (4.4) $ (23.2) $ (8.7) $ (8.2) $ (16.9)
________ ________ ________ ________ ________ ________
________ ________ ________ ________ ________ ________
<FN>
(1) Represents the amount by which interest credited to holders of fully guaranteed large case pension
contracts exceeds interest earned on invested assets supporting such contracts.
</TABLE>
The activity in the reserve for anticipated future losses on
discontinued products was as follows (pretax, in millions):
<TABLE>
<CAPTION>
Six Months Ended June 30, 1995
________________________________
GICs SPAs Total
____ ____ _____
<S> <C> <C> <C>
Reserve at December 31, 1994...... $ 345.6 $ 651.4 $ 997.0
Results of discontinued products.. (47.3) 32.8 (14.5)
________ ________ ________
Reserve at June 30, 1995.......... $ 298.3 $ 684.2 $ 982.5
________ ________ ________
________ ________ ________
</TABLE>
<PAGE> 30
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Large Case Pensions (Continued)
_______________________________
At June 30, 1995 and December 31, 1994, estimated future after-tax
capital losses of $116 million and $127 million ($179 million and
$196 million, pretax), respectively, attributable primarily to
mortgage loans and real estate supporting GICs, and $39 million
and $47 million ($60 million and $73 million, pretax),
respectively, attributable primarily to mortgage loans and real
estate supporting SPAs were expected to be charged to the reserve
for future losses.
Distributions on GICs and SPAs were as follows (in millions):
<TABLE>
<CAPTION>
Three Months Ended June 30, 1995 Six Months Ended June 30, 1995
________________________________ ________________________________
GICs SPAs Total GICs SPAs Total
____ ____ ________ ____ ____ ________
<S> <C> <C> <C> <C> <C> <C>
Scheduled contract maturities,
GIC settlements and benefit
payments (1)...................... $ 614.5 $ 128.5 $ 743.0 $1,259.3 $ 262.2 $1,521.5
________ ________ ________ ________ ________ ________
________ ________ ________ ________ ________ ________
Participant directed withdrawals... $ 22.2 $ - $ 22.2 $ 49.3 $ - $ 49.3
________ ________ ________ ________ ________ ________
________ ________ ________ ________ ________ ________
Three Months Ended June 30, 1994 Six Months Ended June 30, 1994
________________________________ ________________________________
GICs SPAs Total GICs SPAs Total
____ ____ ________ ____ ____ ________
<S> <C> <C> <C> <C> <C> <C>
Scheduled contract maturities
and benefit payments (1).......... $ 520.7 $ 132.4 $ 653.1 $1,083.7 $ 264.0 $1,347.7
________ ________ ________ ________ ________ ________
________ ________ ________ ________ ________ ________
Participant directed withdrawals... $ 52.1 $ - $ 52.1 $ 126.1 $ - $ 126.1
________ ________ ________ ________ ________ ________
________ ________ ________ ________ ________ ________
<FN>
(1) Includes payments made upon contract maturity, early settlement of GIC liabilities in 1995
and other amounts distributed in accordance with contract schedules.
</TABLE>
Cash required to meet the above payments was provided by earnings
on, sales of, and scheduled payments on, invested assets.
(Please see "General Account Investments" on page 39 for a
discussion of investments supporting discontinued products.)
<PAGE> 31
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Property-Casualty
_________________
<TABLE>
<CAPTION>
Operating Summary
(Millions) Three Months Ended June 30, Six Months Ended June 30,
__________________________________ __________________________________
1995 1994 % Change 1995 1994 % Change
____ ____ ________ ____ ____ ________
<S> <C> <C> <C> <C> <C> <C>
Premiums............................ $ 1,003.2 $ 1,093.5 (8.3)% $ 2,050.1 $ 2,211.4 (7.3)%
Net investment income............... 221.1 205.3 7.7 437.0 421.9 3.6
Fees and other income............... 20.4 32.7 (37.6) 43.0 62.5 (31.2)
Net realized capital gains (losses). (41.8) (7.5) - (35.0) 16.2 -
_________ _________ _________ _________
Total revenue.................... 1,202.9 1,324.0 (9.1) 2,495.1 2,712.0 (8.0)
Current and future benefits......... 1,506.8 927.4 62.5 2,348.9 1,966.2 19.5
Operating expenses.................. 196.2 221.2 (11.3) 394.7 474.2 (16.8)
Amortization of deferred policy
acquisition costs.................. 160.4 157.0 2.2 315.5 315.9 (.1)
_________ _________ _________ _________
Total benefits and expenses...... 1,863.4 1,305.6 42.7 3,059.1 2,756.3 11.0
_________ _________ _________ _________
Income (loss) before income taxes... (660.5) 18.4 - (564.0) (44.3) -
Income tax benefits................. (242.5) (1.6) - (214.4) (38.1) -
_________ _________ _________ _________
Net income (loss)................... $ (418.0) $ 20.0 - $ (349.6) $ (6.2) -
_________ _________ _________ _________
_________ _________ _________ _________
Net realized capital gains (losses),
net of tax (included above)........ $ (21.9) $ (7.7) (184.4) $ (18.3) $ 8.7 -
_________ _________ _________ _________
_________ _________ _________ _________
Statutory combined loss and
expense ratio...................... 184.4% 119.7% - 147.1% 125.0% -
_________ _________ _________ _________
_________ _________ _________ _________
Statutory combined loss and
expense ratio (1).................. 110.0% 108.7% - 109.3% 118.1% -
_________ _________ _________ _________
_________ _________ _________ _________
GAAP combined loss and expense
ratio.............................. 182.2% 116.8% - 146.9% 122.7% -
_________ _________ _________ _________
_________ _________ _________ _________
GAAP combined loss and expense
ratio (1).......................... 107.8% 105.8% - 109.0% 115.8% -
_________ _________ _________ _________
_________ _________ _________ _________
Catastrophe loss ratio
(included in combined ratios above) 3.9% 4.2% - 2.8% 10.2% -
_________ _________ _________ _________
_________ _________ _________ _________
<FN>
(1) Excludes the effect of additions to environmental-related claims reserves.
</TABLE>
Property-Casualty's earnings (after-tax) adjusted for additions to
environmental-related claims reserves and net realized capital
gains and losses follow (in millions):
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
___________________________ _________________________
1995 1994 1995 1994
____ ____ ____ ____
<S> <C> <C> <C> <C>
Net income (loss)............................ $(418.0) $ 20.0 $(349.6) $ (6.2)
Less:
Additions to environmental-related
claims reserves......................... (487.5) (76.8) (505.7) (97.6)
Net realized capital gains (losses)....... (21.9) (7.7) (18.3) 8.7
_______ _______ _______ _______
Adjusted earnings............................ $ 91.4 $ 104.5 $ 174.4 $ 82.7
_______ _______ _______ _______
_______ _______ _______ _______
</TABLE>
<PAGE> 32
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Property-Casualty (Continued)
_____________________________
Property-Casualty's adjusted earnings decreased $13 million and
increased $92 million for the three and six months ended June 30,
1995, as compared with the same periods in 1994. The following
significant factors impact the comparison of adjusted earnings:
Catastrophe losses (after-tax and net of reinsurance) for the
three and six months ended June 30, 1995 were $25 million and $38
million ($90 million and $117 million pretax and before
reinsurance), respectively, compared with $29 million and $153
million ($85 million and $387 million pretax and before
reinsurance), respectively, for the same periods a year ago.
Catastrophe losses for the six months ended June 30, 1994 included
$149 million ($383 million pretax and before reinsurance) from the
Los Angeles earthquake and the severe winter weather.
Reductions of prior year loss reserves in the personal auto
business of $54 million and $59 million (after-tax) for the three
and six months ended June 30, 1994, respectively.
Results in 1995 also reflected a reduction in operating expenses,
primarily due to actions taken by management in prior years to
lower costs, a reduction in losses due to the transfer of
additional risk through restructured and expanded reinsurance
programs (discussed below) and higher net investment income.
Premium revenue for the three and six months ended June 30, 1995
was approximately 8 percent and 7 percent, respectively, lower
than in the same periods a year ago, due primarily to the
transferring of additional risk through restructured and expanded
reinsurance programs, and reductions in residual market business
assumed as a result of exiting certain markets.
Net realized capital losses (after-tax) for the three and six
months ended June 30, 1995 include $23 million resulting from the
write-down to estimated fair market value of the company's
investment in a consolidated subsidiary, Aetna Re-Insurance
Company (U.K.) Ltd., which it intends to sell.
Management continues to evaluate personal auto market conditions
in each state and maintain or increase the company's presence in
those states that offer acceptable returns and reduce its presence
in those states where the company is unable to earn acceptable
returns.
The company renewed its principal property catastrophe reinsurance
program in May 1995. It provides approximately 90% coverage of
specified property losses between $150 million and $325 million.
(The company's prior property catastrophe reinsurance program
provided 90% coverage of property losses between $150 million and
$400 million.) Under this program, catastrophe losses outside of
the levels specified are retained by the company. The company
also has in place for 1995 an aggregate excess of loss arrangement
with respect to all of its property-casualty lines for accident
year 1995, providing up to approximately $250 million of
additional net protection. For a discussion of additional
reinsurance arrangements, see "Property-Casualty - Property-
Casualty Reserves" on page 33.
<PAGE> 33
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Property-Casualty (Continued)
_____________________________
Property-Casualty Reserves
Environmental-Related Claims
Reserving for environmental-related claims is subject to
significant uncertainties, and liabilities for these types of
claims generally cannot be estimated using conventional actuarial
reserving techniques. However, in recent years, particularly 1994
and 1995, developments have occurred inside and outside of the
company which have enabled the company to continue to better
estimate these liabilities. Reserves for environmental
liabilities are evaluated by management regularly, and adjustments
are made to reserves as developing loss patterns, reserving
methodologies and other information appear to warrant. As
described below, as a result of further developments, reserves for
environmental-related claims were increased significantly in the
second quarter of 1995.
Background.
___________
The company has been a major writer of commercial insurance
policies which are the types of policies alleged to cover
hazardous waste clean-up costs. The company generally disputes
that there is insurance coverage for environmental claims, and is
vigorously litigating coverage and related issues that will
ultimately determine, in many cases, whether and to what extent
insurance coverage exists for environmental claims.
Environmental claims, particularly large coverage disputes, are
complex and subject to significant uncertainties in addition to
the vagaries of and risks inherent in major litigation generally.
First, the underlying liabilities of the claimants are difficult
to estimate. At any given waste disposal site, the total amount of
remediation cost is frequently difficult to estimate and the
portion to be allocated to a potentially responsible party ("PRP")
depends on a wide variety of factors, including volumetric
contribution, relative toxicity, number of years active at the
site, extent of impairment to the environment and ability of
others to pay. A PRP may have no liability, may share
responsibility with others or may bear the cost alone. Second,
there are uncertainties relating to whether insurance policies
will be found to cover PRP liabilities. For example, courts have
reached inconsistent conclusions regarding scope of coverage
issues such as: whether insurance coverage exists at all; what
policies provide the coverage; whether an insurer has a duty to
defend; whether an insured's environmental losses are caused by
one or more "occurrences" for purposes of determining applicable
policy limits; how pollution exclusions in policies should be
applied; and whether cleanup costs are payable as "damages."
<PAGE> 34
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Property-Casualty (Continued)
_____________________________
Developments Leading up to the Company's Environmental Study.
_____________________________________________________________
The company has continued to gather and analyze legal and factual
information on environmental-related claims, and has continued to
reassess its reserving techniques for these claims as developments
have occurred over time. During 1994 and 1995, certain of the
company's environmental claims in litigation matured and
approached the trial stage, and the company obtained information
that allowed it to estimate its exposure on certain of the claims
involved in the litigation. Also, certain policyholders settled
their environmental claims with the company in 1994 and 1995,
including, in the first quarter of 1995, a policyholder that had
presented the company with a particularly large claim for
coverage. The maturing and settling of these claims, coupled with
increasing expertise in handling environmental claims, also better
enabled the company to understand the profile of its other
environmental claims. Additionally, supplemental data bases and
alternative methodologies were being developed by outside firms
for possible use in estimating environmental liabilities.
The Company's Environmental Study.
__________________________________
The company initiated a comprehensive environmental reserving
review in early 1995. The company dedicated substantial resources
to this review in an effort to improve the company's ability to
estimate its environmental-related liability. The review was
concluded at the end of the second quarter of 1995.
As part of its review, the company conducted an extensive search
for available information about environmental claims, which
included gathering, studying, and testing additional data obtained
from various outside sources. Also, as part of this review, the
company re-examined a variety of conventional actuarial reserving
techniques to determine whether they could be used in estimating
environmental liabilities, and it also examined the
appropriateness of other developing techniques for possible use in
estimating these liabilities. The company concluded that
conventional actuarial reserving techniques were generally not
useful in estimating environmental liabilities because of the
uncertainties involved and the lack of sufficient historically-
developed data; however, the company was able to develop a
sophisticated methodology which, when used in conjunction with
other methods and information available to it, assisted the
company in estimating indemnity-related liabilities for all of its
known environmental claims.
<PAGE> 35
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Property-Casualty (Continued)
_____________________________
This methodology (the "exposure methodology") is a detailed
analysis that involves the estimation of indemnity-related
liabilities for environmental claims from direct policies on a
site-by-site, policyholder-by-policyholder basis, which differs
from macro-based analyses which attempt to estimate a company's
liability based on market share or other overall measurements.
The exposure methodology depends heavily upon management's
subjective judgment, in that it requires management to make
numerous assumptions as to, among other things, estimated total
clean-up costs for each site, allocation of site clean-up costs to
particular policyholders under joint and several liability
principles, resolution of unsettled coverage questions, and
resolution of unsettled questions involving the allocation of
losses to specific insurance policies. As all of the information
necessary to estimate liability on a particular site frequently is
not available, the exposure methodology also simulates data in
such cases from available data. The company engaged an outside
actuarial firm to assist it in reviewing the exposure methodology
and certain significant assumptions used. The company also
engaged an outside law firm to assist it in reviewing the
principal legal coverage assumptions. Although the exposure
methodology relies heavily upon management judgment and simulated
data, the use of simulation models is an appropriate, accepted
actuarial practice to estimate liabilities subject to significant
uncertainties.
In addition to estimating indemnity-related liabilities on known
claims, as part of its reserving review the company also estimated
losses for incurred but not reported environmental claims
("IBNR"), unallocated loss adjustment expenses ("ULAE") associated
with environmental claims, and additional costs of expected future
coverage litigation. The company's estimation of IBNR, ULAE and
coverage litigation costs are based on a combination of historical
data and various assumptions about the future, including
assumptions regarding the number and severity of new environmental
claims that will arise, and trends in the volume and cost of
future litigation. The company also had the outside actuarial
firm assist it in reviewing its methodology for estimating these
types of environmental liabilities and certain significant
assumptions made in doing so.
Reserving Actions Taken Upon Completion of the Company's
________________________________________________________
Environmental Study.
____________________
Upon completing its reserving review, the company added $750
million (pretax) ($488 million, after-tax) to environmental-
related claims reserves in the second quarter of 1995. While the
company expects to recover some of its environmental losses from
its reinsurers, due to the uncertainty in estimating amounts to be
recovered, no reinsurance benefits were recorded in establishing
this addition to reserves. This reserve addition reflects
approximately $397 million (pretax) ($258 million, after-tax) for
indemnity-related liabilities on known claims and approximately
$353 million (pretax) ($230 million, after-tax) for IBNR, ULAE and
additional coverage litigation costs.
<PAGE> 36
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Property-Casualty (Continued)
_____________________________
Following this reserve addition, the company's total reserve for
environmental-related liabilities at June 30, 1995 was $1,187
million, before reduction for reinsurance of $100 million (net of
an allowance of $16 million for reinsurance considered to be
uncollectible) and net of discount on environmental settlements.
This reserve consists of approximately $700 million for indemnity-
related environmental liabilities for all of the company's known
environmental claims. The remainder of the reserve represents
IBNR, estimated coverage litigation costs, and ULAE.
Conclusion.
___________
In the opinion of management, the company's reserves for
environmental-related claims at June 30, 1995 represent the
company's best estimate of its ultimate environmental-related
liability, based on currently known facts, current law (including
Superfund), current technology, and assumptions considered
reasonable where facts are not known. Due to the significant
uncertainties and related management judgment involved in
estimating the company's environmental liability, no assurances
can be given that the environmental reserve represents the amount
that will ultimately be paid by the company for all environmental-
related losses. The amount ultimately paid could differ
materially from the company's currently recorded reserve as legal
and factual issues are clarified, but any difference cannot be
reasonably estimated at this time.
In addition, the company has purchased reinsurance protection
which could be available to reduce the statutory surplus effects
of additional environmental reserve development. The reinsurance
provides aggregate protection of $335 million for adverse loss
development beyond reserves held (net of existing reinsurance) at
June 30, 1995 for environmental, asbestos, certain general
liability and workers' compensation claims, occurring prior to
January 1, 1995 ($6.9 billion). Under this arrangement, $165
million of the existing reserves for such losses have been ceded.
This is a retroactive contract and the earnings benefits of any
future recoveries arising under this arrangement would be
accounted for as such under FAS No. 113 (i.e., at a discounted
value). Because of the length of time between the recording of
any reinsurance recoverable and its ultimate payment, the initial
benefit of any recovery could be substantially less than the
amount of reserve development.
Please see "Liquidity and Capital Resources" on page 47 for a
discussion of the effects of the environmental-related reserve
addition on the company's liquidity and capital resources. For a
full discussion of property-casualty reserves, including
environmental and asbestos-related reserves, please see Note 13 of
Condensed Notes to Financial Statements, the company's Annual
Report on Form 10-K for the year ended December 31, 1994, and the
company's Form 10-Q for the quarter ended March 31, 1995.
<PAGE> 37
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
International
_____________
<TABLE>
<CAPTION>
Operating Summary
(Millions) Three Months Ended June 30, Six Months Ended June 30,
__________________________________ __________________________________
1995 1994 % Change 1995 1994 % Change
____ ____ ________ ____ ____ ________
<S> <C> <C> <C> <C> <C> <C>
Premiums............................ $ 252.3 $ 233.8 7.9% $ 472.9 $ 438.4 7.9%
Net investment income............... 87.1 79.3 9.8 155.4 156.6 (.8)
Fees and other income............... 29.4 23.6 24.6 55.7 45.1 23.5
Net realized capital gains (losses). 2.1 (.8) - (1.7) 5.9 -
_________ _________ _________ _________
Total revenue.................... 370.9 335.9 10.4 682.3 646.0 5.6
Current and future benefits......... 219.4 209.2 4.9 416.2 398.6 4.4
Operating expenses.................. 97.1 90.1 7.8 180.4 175.8 2.6
Amortization of deferred policy
acquisition costs.................. 20.3 14.5 40.0 34.1 26.1 30.7
_________ _________ _________ _________
Total benefits and expenses...... 336.8 313.8 7.3 630.7 600.5 5.0
_________ _________ _________ _________
Income before income taxes.......... 34.1 22.1 54.3 51.6 45.5 13.4
Income taxes........................ 10.5 5.4 94.4 13.9 15.2 (8.6)
_________ _________ _________ _________
Net income.......................... $ 23.6 $ 16.7 41.3 $ 37.7 $ 30.3 24.4
_________ _________ _________ _________
_________ _________ _________ _________
Net realized capital gains (losses),
net of tax (included above)........ $ .3 $ (.2) - $ (2.5) $ 2.8 -
_________ _________ _________ _________
_________ _________ _________ _________
</TABLE>
International's net income for the three and six months ended June
30, 1995 increased $7 million compared with the same periods a
year ago. Excluding net realized capital gains and losses,
results for the three and six months ended June 30, 1995 increased
$6 million and $13 million, respectively, from the same periods a
year ago. The improvement in results primarily reflected
increased earnings in the Pacific Rim.
During the third quarter of 1994, the company changed its
accounting for its Korean affiliate from the consolidated basis of
accounting to the equity basis of accounting. During the three
and six months ended June 30, 1994, the company recognized revenue
of $48 million and $98 million, respectively, and benefits and
expenses of $48 million and $98 million, respectively, from the
affiliate. During the first quarter of 1995, the company sold its
interest in the affiliate at book value.
During the first quarter of 1995, the company increased its
ownership in several of its Chilean operating subsidiaries. The
effects of this increased ownership are not expected to materially
impact the results of the segment.
<PAGE> 38
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Corporate
_________
<TABLE>
<CAPTION>
Operating Summary
(Millions, after-tax) Three Months Ended June 30, Six Months Ended June 30,
__________________________________ __________________________________
1995 1994 % Change 1995 1994 % Change
____ ____ ________ ____ ____ ________
<S> <C> <C> <C> <C> <C> <C>
Interest expense............. $ 17.8 $ 14.2 25.4% $ 35.9 $ 27.6 30.1%
Other expense................ 29.4 36.8 (20.1) 61.4 88.6 (30.7)
</TABLE>
The increase in interest expense of $4 million and $8 million for
the three and six months ended June 30, 1995 compared to the same
periods a year ago resulted from the issuance by a subsidiary of
$275 million of 9 1/2 % cumulative monthly income preferred
securities in November 1994. Other expense for the six months
ended June 30, 1995 included after-tax capital losses of $2
million. Net realized capital losses were less than $1 million
for the three months ended June 30, 1995. Included in other
expenses for the three and six months ended June 30, 1994 were
after-tax capital gains of $3 million and after-tax capital losses
of $4 million, respectively. Excluding realized capital gains and
losses, the decrease in other expenses in 1995 resulted from a
reduction of corporate staff area expenses associated with the
company's 1994 restructuring.
<PAGE> 39
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
General Account Investments
___________________________
The company's invested assets were comprised of the following, net
of impairment reserves:
<TABLE>
<CAPTION>
June 30, December 31,
(Millions) 1995 1994
____________________________________________________________________________
<S> <C> <C>
Debt securities:
Held for investment, at amortized
cost (fair value $1,823.8 and $1,991.2) $ 1,786.4 $ 2,000.8
Available for sale, at fair value
(amortized cost $38,438.5 and $36,984.2) 39,583.4 35,110.7
Equity securities, at fair value
(cost $1,152.8 and $1,326.9) 1,585.8 1,655.6
Short-term investments 520.2 450.4
Mortgage loans 10,802.6 11,843.6
Real estate 1,618.7 1,545.7
Policy loans 571.0 533.8
Other 1,215.2 1,152.7
__________________________________________________________________________
Total invested assets $ 57,683.3 $ 54,293.3
________________________
________________________
</TABLE>
Please refer to the company's 1994 Annual Report to Shareholders
for a description of the company's investment objectives and
policies.
The change in invested assets from December 31, 1994 to June 30,
1995 primarily reflected appreciation of debt securities due to a
decrease in interest rates, partially offset by a decrease in
mortgage loans. Debt securities included unrealized capital gains
of $1.1 billion at June 30, 1995, compared with unrealized capital
losses of $1.9 billion at December 31, 1994. Of such net
unrealized capital gains at June 30, 1995, gains of $282 million
and $541 million related to assets supporting discontinued
products and experience rated pension contractholders,
respectively. The decrease in mortgage loans principally
reflected prepayments, payments at maturity on mortgage loans,
foreclosures and the company's adoption of FAS Nos. 114 and 118 on
January 1, 1995.
The risks associated with investments supporting experience rated
pension and annuity products are assumed by those customers
subject to, among other things, certain minimum guarantees. The
anticipated future losses associated with investments supporting
discontinued products were provided for in the reserve on
discontinuance of products.
<PAGE> 40
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
General Account Investments (Continued)
_______________________________________
Debt Securities
As of June 30, 1995 and December 31, 1994, the company's
investments in debt securities represented 72% and 68%,
respectively, of total general account invested assets and were as
follows:
<TABLE>
<CAPTION>
June 30, December 31,
(Millions) 1995 1994
__________________________________________________________________________
<S> <C> <C>
Supporting discontinued products $ 6,120.7 $ 6,155.0
Supporting experience rated products 13,382.4 11,770.5
Supporting remaining products 21,866.7 19,186.0
____________________________
Total $41,369.8 $37,111.5
____________________________
____________________________
</TABLE>
Included in the company's total debt security balances were the
following categories of debt securities:
<TABLE>
<CAPTION>
(Millions) June 30, 1995
_______________________________________________________________________________________________________
"Below Investment "Problem" Debt "Potential Problem"
Grade" Debt Securities Securities Debt Securities
______________________ ______________ ___________________
<S> <C> <C> <C>
Total $1,693.7 $ 120.4 $ 119.0
________ ________ ________
________ ________ ________
Percentage of total:
Supporting discontinued products 30.4% 26.1% 45.4%
Supporting experience rated products 33.2 19.2 31.8
Supporting remaining products 36.4 54.7 22.8
________ ________ ________
100.0% 100.0% 100.0%
________ ________ ________
________ ________ ________
December 31, 1994
________________________________________________________________
"Below Investment "Problem" Debt "Potential Problem"
Grade" Debt Securities Securities Debt Securities
______________________ ______________ ___________________
<S> <C> <C> <C>
Total $1,873.0 $ 146.4 $ 170.0
________ ________ ________
________ ________ ________
Percentage of total:
Supporting discontinued products 27.8% 35.6% 27.9%
Supporting experience rated products 25.8 14.3 29.6
Supporting remaining products 46.4 50.1 42.5
________ ________ ________
100.0% 100.0% 100.0%
________ ________ ________
________ ________ ________
</TABLE>
"Below investment grade" debt securities (which include "problem"
debt securities and "potential problem" debt securities described
below) are defined to be securities that carry a rating below BBB-
/Baa3. Such debt securities have been written down for other than
temporary declines in value.
<PAGE> 41
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
General Account Investments (Continued)
_______________________________________
Management defines "problem" debt securities to be securities for
which payment is in default, securities of issuers which are
currently in bankruptcy or in out-of-court reorganizations, or
securities of issuers for which bankruptcy or reorganization
within six months is considered likely.
"Potential problem" debt securities are currently performing debt
securities for which neither payment default nor debt
restructuring is anticipated within six months, but whose issuers
are experiencing significant financial difficulties. Identifying
such potential problem debt securities requires significant
judgment as to likely future market conditions and developments
specific to individual debt securities.
The company does not accrue interest on problem debt securities
when management believes the likelihood of collection of interest
is doubtful. Lost investment income on problem debt securities
was as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
__________________ __________________
(Millions) 1995 1994 1995 1994
___________________________________________________________________________________
<S> <C> <C> <C> <C>
Allocable to discontinued products $ .4 $ 1.1 $ .8 $ 1.9
Allocable to experience rated products .4 .8 .6 1.3
Allocable to remaining products .7 .8 1.8 1.7
</TABLE>
At June 30, 1995 and December 31, 1994, the carrying value (fair
value) of collateralized mortgage obligations ("CMOs") was $3.5
billion and $3.4 billion, respectively. The principal risks
inherent in holding CMOs are prepayment and extension risks
related to dramatic decreases and increases in interest rates
whereby the value of the CMOs would be subject to variability on
the repayment of principal from the underlying mortgages earlier
or later than originally anticipated. At June 30, 1995 and
December 31, 1994, approximately 74% and 82%, respectively, of the
company's CMO holdings consisted of sequential and planned
amortization class ("PAC") bonds that are subject to less
prepayment and extension risk than other CMO instruments. At June
30, 1995 and December 31, 1994, approximately 70% and 74%,
respectively, of the company's CMO holdings were collateralized by
residential mortgage loans, on which the timely payment of
principal and interest is backed by specified government agencies
(e.g., GNMA, FNMA, FHLMC). Z-tranches, which amounted to
approximately 13% and 8% of the company's CMO holdings at June 30,
1995 and December 31, 1994, respectively, receive principal
payments from the underlying mortgage pool only after all other
priority classes have been retired.
<PAGE> 42
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
General Account Investments (Continued)
_______________________________________
Mortgage Loans
During the first six months of 1995, the mortgage loan portfolio
was reduced 9% to $10.8 billion, net of impairment reserves. The
company's mortgage loan investments, net of impairment reserves,
supported the following types of business:
<TABLE>
<CAPTION>
June 30, December 31,
(Millions) 1995 1994
_______________________________________________________________________
<S> <C> <C>
Supporting discontinued products $ 4,025.8 $ 4,294.9
Supporting experience rated products 3,099.3 3,652.1
Supporting remaining products 3,677.5 3,896.6
_____________________________
Total $10,802.6 $11,843.6
_____________________________
_____________________________
</TABLE>
During the first six months of 1995, the company continued to
manage its mortgage loan portfolio to reduce the balance in
absolute terms and relative to invested assets, and to reduce its
overall risk. Mortgage loans, net of impairment reserves, now
represent 19% of total general account invested assets, down from
38% in 1990. During this period, the principal balance of the
mortgage portfolio was reduced by 50%. The principal balance of
mortgage loans decreased $1 billion since December 31, 1994
primarily reflecting the effect of repayments of maturing loans
and loan prepayments and foreclosures.
During 1994, the company implemented a troubled debt restructuring
program. The primary objective of this program is to restructure
eligible loans in a manner which creates a market rate transaction
which will perform in accordance with its restructured terms. The
program is applied to those loans which have sound property and
borrower fundamentals but possess excess debt. An important
feature of these loans is that in exchange for principal
forgiveness on a portion of the loan, the company typically
retains the right to participate in property appreciation to the
extent market conditions improve in the future.
In those situations where the property fundamentals do not support
a restructuring of the loan, the company generally acquires the
collateral through foreclosure. Loans with a principal balance of
$146 million and collateral with a fair market value of $119
million were foreclosed upon in the first six months of 1995. In
certain cases, the company has taken substantive possession of the
property supporting its loan, coupled with the borrower
surrendering its interest in the future economic benefits in the
property. Where this has occurred, the loans are considered in-
substance foreclosures, written down to their fair market value
less selling costs and classified as real estate held for sale.
At June 30, 1995 and December 31, 1994, there were $177 million
and $193 million, respectively, of in-substance foreclosures (net
of write-offs of $138 million and $136 million, respectively).
<PAGE> 43
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
General Account Investments (Continued)
_______________________________________
Included in the company's total mortgage loan balances were the
following categories of mortgage loans:
<TABLE>
<CAPTION>
(Millions) June 30, 1995
__________________________________________________________________________________________________________
Restructured Potential
Problem Loans Loans Problem Loans* Total
_____________ ____________ ______________ _____
<S> <C> <C> <C> <C>
Total $ 528.4 $ 655.3 $1,199.1 $2,382.8
________ ________ ________ ________
________ ________ ________ ________
Percentage of total:
Supporting discontinued products 20.8% 47.0% 46.9%
Supporting experience rated products 35.0 26.2 28.1
Supporting remaining products 44.2 26.8 25.0
________ ________ ________
100.0% 100.0% 100.0%
________ ________ ________
________ ________ ________
Impairment reserves (1) $ 902.6**
__________
__________
Impairment reserves as
a percentage of total 37.9%
_________
_________
December 31, 1994
___________________________________________________________________
Restructured Potential
Problem Loans Loans Problem Loans* Total
_____________ ____________ ______________ _____
<S> <C> <C> <C> <C>
Total $ 673.1 $ 706.1 $ 918.7 $2,297.9
________ ________ ________ ________
________ ________ ________ ________
Percentage of total:
Supporting discontinued products 36.9% 39.1% 48.8%
Supporting experience rated products 30.8 31.1 25.5
Supporting remaining products 32.3 29.8 25.7
________ ________ ________
100.0% 100.0% 100.0%
________ ________ ________
________ ________ ________
Impairment reserves (1) $ 784.1**
__________
__________
Impairment reserves as
a percentage of total 34.1%
_________
_________
<FN>
(1) Please see Note 6 of Condensed Notes to Financial Statements for composition of
impairment reserves between specific and general impairment reserves.
* In connection with the company's adoption of FAS Nos. 114 and 118 on January 1, 1995
(Please see Note 6 of Condensed Notes to Financial Statements), management has revised
the definition of "potential problem loans". (Please see "potential problem loans"
on page 44.)
** The general reserve at December 31, 1994 excluded reserves of approximately $208.5
million related to experience rated products. Had such reserves been included, total
reserves would have been $992.6 million. In connection with the company's adoption
of FAS Nos. 114 and 118, the general reserve at June 30, 1995 included such reserves,
related to experience rated products. The inclusion of these reserves did not impact
earnings or shareholders' equity.
</TABLE>
"Problem loans" are defined to be loans with payments over 60 days
past due, loans on properties in the process of foreclosure, loans
on properties involved in bankruptcy proceedings and loans on
properties subject to redemption. Loans on properties in the
process of foreclosure decreased to $309 million at June 30, 1995
from $422 million at December 31, 1994.
<PAGE> 44
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
General Account Investments (Continued)
_______________________________________
"Restructured loans" are loans whose original contract terms have
been modified to grant concessions to the borrower and are
currently performing pursuant to such modified terms.
Restructured loans that have a market rate of interest at the time
of the restructure (which represents the interest rate the company
would charge for a new loan with comparable risk) and demonstrate
sustainable performance (as generally evidenced by six months of
pre- or post-restructuring payment performance in accordance with
the restructured terms) may be returned to performing status.
(Please see the company's 1994 Annual Report to Shareholders for a
complete description of the company's restructuring program.) No
such restructures and transfers to performing status occurred
during the six months ended June 30, 1995.
In connection with the company's adoption of FAS Nos. 114 and 118
on January 1, 1995 (please see Note 6 of Condensed Notes to
Financial Statements), management has revised the definition of
"potential problem loans" to include all loans which are
performing pursuant to existing terms and are considered likely to
become classified as problem or restructured loans. Prior to
January 1, 1995, "potential problem loans" were performing loans
which management believed were likely to become classified as
problem or restructured loans in the next 12 months or so. As a
result of the revised definition, "potential problem loans" at
June 30, 1995 are approximately $307 million higher than they
would have been had the definition not been changed. "Potential
problem loans" are identified through the portfolio review process
on the basis of known information about the ability of borrowers
to comply with present loan terms. Identifying such potential
problem loans requires significant judgment as to likely future
market conditions and developments specific to individual
properties and borrowers. Provision for losses that management
believes are likely to arise from such potential problem loans is
included in the specific impairment reserves. (Please see Note 6
of Condensed Notes to Financial Statements for a discussion of
mortgage loan impairment reserves.)
<PAGE> 45
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
General Account Investments (Continued)
_______________________________________
The company does not accrue interest on problem loans or
restructured loans when management believes the collection of
interest is unlikely. The amount of pretax investment income
required by the original terms of such problem and restructured
loans outstanding at June 30 and the portion thereof actually
recorded as income were as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
__________________ __________________
(Millions) 1995 1994 1995 1994
_________________________________________________________________________________
<S> <C> <C> <C> <C>
Income which would have been
recorded under original terms
of loans $ 30.0 $ 65.7 $ 57.4 $ 139.6
Income recorded 16.9 28.0 28.6 62.1
_______ _______ _______ _______
Lost investment income $ 13.1 $ 37.7 $ 28.8 $ 77.5
_______ _______ _______ _______
_______ _______ _______ _______
Lost investment income allocated to
investments supporting discontinued
products (included above) $ 2.6 $ 20.7 $ 8.7 $ 37.4
_______ _______ _______ _______
_______ _______ _______ _______
Lost investment income allocated to
investments supporting experience
rated pension products
(included above) $ 5.3 $ 6.6 $ 8.5 $ 19.4
_______ _______ _______ _______
_______ _______ _______ _______
Lost investment income allocated to
investments supporting remaining
products (included above) $ 5.2 $ 10.4 $ 11.6 $ 20.7
_______ _______ _______ _______
_______ _______ _______ _______
</TABLE>
<PAGE> 46
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
General Account Investments (Continued)
_______________________________________
Real Estate
The company's equity real estate balances, net of write-downs and
reserves, were as follows:
<TABLE>
<CAPTION>
(Millions) June 30, 1995
________________________________________________________________________________________________
Investment Properties Total Equity
Real Estate Held for Sale Real Estate
___________ _____________ ____________
<S> <C> <C> <C>
Total $ 398.2 $1,220.5 (1) $1,618.7
________ ________ ________
________ ________ ________
Percentage of total:
Supporting discontinued products 22.0% 50.3%
Supporting experience rated products 6.9 21.5
Supporting remaining products 71.1 28.2
________ ________
100.0% 100.0%
________ ________
________ ________
December 31, 1994
_________________________________________________________
Investment Properties Total Equity
Real Estate Held for Sale Real Estate
___________ _____________ ____________
<S> <C> <C> <C>
Total $ 382.3 $1,163.4 (1) $1,545.7
________ ________ ________
________ ________ ________
Percentage of total:
Supporting discontinued products 23.8% 54.9%
Supporting experience rated products 8.3 21.6
Supporting remaining products 67.9 23.5
________ ________
100.0% 100.0%
________ ________
________ ________
<FN>
(1) Includes $176.9 million and $193.4 million of in-substance foreclosures at
June 30, 1995 and December 31, 1994, respectively. (Please see "Mortgage Loans"
on page 42 for discussion of in-substance foreclosures.)
</TABLE>
All real estate acquired through foreclosure, including in-
substance foreclosures, is classified as properties held for sale.
These properties were carried at 62% and 60% of the company's cash
investment (unpaid mortgage balance plus capital additions) at
June 30, 1995 and December 31, 1994, respectively.
Investment real estate, which is generally carried at depreciated
cost, is written down to fair value to reflect other than
temporary declines in market value. The fair value of assets
acquired through foreclosure is established as the cost basis at
the time of foreclosure. Subsequent to acquisition, properties
classified as held for sale are carried at the lower of cost or
fair value less estimated selling costs. Adjustments to the
carrying value of properties held for sale resulting from changes
in fair value, are recorded in a valuation reserve. Property
valuations are reviewed regularly by investment management.
Capital additions and asset improvements increase the cost basis
of the asset while depreciation reduces the cost basis.
<PAGE> 47
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
General Account Investments (Continued)
_______________________________________
Total real estate write-downs and valuation reserves on properties
included in the company's equity real estate balances were as
follows:
<TABLE>
<CAPTION>
June 30, December 31,
(Millions) 1995 1994
______________________________________________________________________
<S> <C> <C>
Allocable to discontinued products $ 351.0 $ 376.0
Allocable to experience rated products 189.5 179.6
Allocable to remaining products 178.9 206.6
________ ________
Total $ 719.4 $ 762.2
________ ________
________ ________
</TABLE>
For the periods shown below, total after-tax net realized capital
(gains) losses from real estate write-downs and changes in the
valuation reserves were as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
___________________ __________________
(Millions) 1995 1994 1995 1994
____________________________________________________________________________________
<S> <C> <C> <C> <C>
Allocable to discontinued products (1) $ - $ 1.2 $ - $ 13.8
Allocable to experience
rated products (2) - 4.5 - 4.6
Allocable to remaining products (10.8) (*) 1.2 (10.8) (*) (.4)
<FN>
(1) Write-downs and impairment expense allocable to discontinued products are
charged against the reserve for future losses and do not affect the company's
results of operations.
(2) Write-downs and impairment expense allocable to experience rated products
do not affect the company's results of operations.
(*) Includes a $12.8 million realized capital gain related to the reversal of
valuation reserves on a foreclosed property which appreciated in value.
</TABLE>
Use of Derivatives and Other Investments
The company's hedging activity has been limited and has
principally consisted of using futures, forward contracts and
interest rate swaps to hedge interest rate risk and currency risk.
These instruments, viewed separately, subject the company to
varying degrees of market and credit risk. However, when used for
hedging, the expectation is that these instruments would reduce
overall market risk. Market risk is the possibility that future
changes in market prices may decrease the market value of one or
all of these financial instruments. Credit risk arises from the
potential inability of counterparties to perform under the terms
of the contracts. Management does not believe that the current
level of hedging activity will have a material effect on the
company's liquidity or results of operations. (Please see Note 10
of Condensed Notes to Financial Statements for a discussion of the
company's hedging activities.)
<PAGE> 48
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
General Account Investments (Continued)
_______________________________________
The company also had investments in certain debt instruments with
derivative characteristics, including those where market value is
at least partially determined by, among other things, levels of or
changes in domestic and/or foreign interest rates (short term or
long term), exchange rates, prepayment rates, equity markets or
credit ratings/spreads. The amortized cost and fair value of
these securities, included in the $41.4 billion debt securities
portfolio, as of June 30, 1995 was as follows:
<TABLE>
<CAPTION>
Amortized Fair
(Millions) Cost Value
_____________________________________________________________________________
<S> <C> <C>
Collateralized mortgage obligations:............ $ 3,380.4 $ 3,507.0
Interest-only strips (included above)......... 17.3 33.9
Principal-only strips (included above)........ 53.1 66.6
Treasury and agency strips:
Principal..................................... 1,037.0 1,049.8
Interest...................................... 102.0 98.0
Structured notes (1)............................ 95.0 100.5
Warrants to purchase debt securities (2)........ 2.8 3.1
Mandatorily convertible preferred stock......... 7.3 7.4
<FN>
(1) Represents non-leveraged instruments whose fair values and credit risk
are based on underlying securities, including fixed income securities
and interest rate swap agreements.
(2) Represents the right to purchase specific debt securities and is accounted
for as a hedge. Upon exercise, the cost of the warrants will be added to
the basis of the debt securities purchased and amortized over their lives.
</TABLE>
<PAGE> 49
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Liquidity and Capital Resources
_______________________________
As a result of the addition by the company of $750 million
(pretax) ($488 million, after-tax) to the environmental-related
claims reserves in the second quarter of 1995, the company intends
to contribute additional capital to the company's property-
casualty subsidiaries in order to restore capital levels
(including risk-based capital), to appropriate levels for
regulatory and other purposes, consistent with year-end 1994.
Such infusion of capital is expected to be approximately $450
million and will be made by year-end 1995. The company currently
expects to generate the funding for such capital contributions
through parent company financing.
Cash and cash equivalents at June 30, 1995 and December 31, 1994
were $2.2 billion and $3.0 billion, respectively. For the six
months ended June 30, 1995, net cash provided by operating
activities was $259 million. Net cash used for operating
activities was $170 million during the first six months of 1994.
For the first six months of 1995, net cash used for investing
activities was $18 million and included a net increase in debt
securities of $1.1 billion, offset by $937 million from maturities
and repayments of mortgage loans. Net cash provided by investing
activities of $1.0 billion for the six months ended June 30, 1994
included a net increase of $122 million in short-term investments.
Short-term borrowings are used from time to time to provide for
timing differences between receipts and disbursements in various
portfolios. The maximum amount of domestic short-term borrowings
outstanding during the first six months of 1995 was $185 million.
The company has extended the maturity of, and adjusted interest
rates to current market on, certain maturing mortgage loans where
the borrower was unable to obtain financing elsewhere due to tight
lending practices by banks and other financial institutions over
the past several years. Of the $623 million of mortgage loans
scheduled to mature during the first six months of 1995, $385
million were not paid as scheduled, a substantial portion of which
supported large case pension liabilities. Of the loans not paid
as scheduled, $104 million were extended at interest rates at
least equal to current market (average rate of 9% over an average
extension period of 5 years), $271 million were under forbearance
(continuing to make payments under original loan terms) or under
discussion with borrowers at June 30, 1995 and $10 million were
foreclosed upon. Of the $271 million of loans under forbearance
or under discussion with borrowers, $20 million were classified as
problem or restructured loans at June 30, 1995. Despite various
indications that liquidity is returning to certain real estate
markets, the company expects it will continue to extend or
refinance maturing loans in the portfolio.
In July 1995, the company extended the maturity of its $500
million revolving credit facility which was scheduled to expire in
July 1995. The extended maturity date of the facility is July
1996. (Please see Note 9 of Condensed Notes to Financial
Statements.) In addition, the company has a $500 million credit
facility which terminates in July 1999.
<PAGE> 50
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Liquidity and Capital Resources (Continued)
___________________________________________
Pursuant to shelf registration statements declared effective by
the Securities and Exchange Commission, the company may offer and
sell up to $550 million of various types of securities, and Aetna
Capital L.L.C., a subsidiary of the company, may offer and sell up
to an additional $225 million of preferred securities.
Rating Agencies
During 1995, ratings of Aetna Life and Casualty Company and
certain of its subsidiaries were lowered by certain of the rating
agencies. Aetna's ratings at February 7, 1995, as detailed in the
1994 Form 10-K, and at July 28, 1995 follow:
<TABLE>
<CAPTION>
Rating Agencies
____________________________________________________________________
Moody's Investors Standard
A.M. Best Duff & Phelps Service & Poor's
____________________________________________________________________
<S> <C> <C> <C> <C>
Aetna Life and Casualty Company
(senior debt)
February 7, 1995 * A+ A2 A+
July 28, 1995 * A A2 A-
Aetna Life and Casualty Company
(commercial paper)
February 7, 1995 * Duff 1 P-1 A-1
July 28, 1995 * Duff 1 P-1 A-2
Aetna Life Insurance Company
(claims paying)
February 7, 1995 A AA (1) Aa3 A+
July 28, 1995 A AA- Aa3 A+
The Aetna Casualty and Surety Company
(claims paying)
February 7, 1995 A- AA- A1 A+
July 28, 1995 A- A+ A1 A
Aetna Casualty and Surety Company of America
(claims paying)
February 7, 1995 A ** ** **
July 28, 1995 A ** ** **
Aetna Life Insurance and Annuity Company
(claims paying)
February 7, 1995 A++ AA+ Aa2 AA
July 28, 1995 A+ AA+ Aa2 AA
<FN>
(1) On rating watch-down.
* Not rated by the agency.
** Not rated on a separate company basis.
</TABLE>
Dividends Declared
On June 30, 1995, the Board of Directors declared a quarterly
dividend of $.69 per share of common capital stock for
shareholders of record at the close of business on July 28, 1995,
payable August 15, 1995.
<PAGE> 51
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Other Matters
_____________
Income Taxes
Net unrealized capital gains and losses are presented in
shareholders' equity net of deferred taxes. During the six months
ended June 30, 1995, the company moved from a net unrealized
capital loss position of $1,072 million at December 31, 1994 to a
net unrealized capital gain position of $345 million at June 30,
1995, primarily due to decreases in interest rates. As a result,
all valuation allowances previously established related to
deferred tax assets on these capital losses were reversed, which
had no impact on net income for the three and six months ended
June 30, 1995.
Severance and Facilities Charges
During the three and six months ended June 30, 1995, the company
charged costs of $18 million and $57 million, respectively, to the
severance and facilities reserve established in 1993 related to
cost reduction actions. Substantially all of the approximately
4,000 positions expected to be eliminated had been completed by
June 30, 1995 and the related severance benefits charged against
the reserve. In addition, substantially all of the annualized
after-tax savings of approximately $200 million related to these
and other cost reduction actions have been realized as of June 30,
1995. The remaining cost reduction actions and related savings
are expected in the second half of 1995.
New Accounting Pronouncements
_____________________________
Please see Note 2 of Condensed Notes to Financial Statements for a
discussion of recently issued accounting pronouncements.
<PAGE> 52
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
The company is continuously involved in numerous lawsuits arising,
for the most part, in the ordinary course of its business
operations either as a liability insurer defending third-party
claims brought against its insureds or as an insurer defending
coverage claims brought against itself, including lawsuits related
to issues of policy coverage and judicial interpretation. One
such area of coverage litigation involves legal liability for
environmental and asbestos-related claims. These lawsuits and
other factors make reserving for these claims subject to
significant uncertainties.
While the ultimate outcome of such litigation cannot be determined
at this time, such litigation net of reserves established
therefore and giving effect to reinsurance probable of recovery,
is not expected to result in judgments for amounts material to the
financial condition of the company, although it may adversely
affect results of operations in future periods.
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Annual Meeting of Shareholders of Aetna Life and Casualty
Company was held on Friday, April 28, 1995.
(b) Directors elected at the Meeting:
<TABLE>
<CAPTION>
Votes Votes Broker
For Withheld Non-Votes
_____ ________ _________
<S> <C> <C> <C>
Wallace Barnes 101,622,820 1,223,536 0
Ronald E. Compton 101,266,603 1,579,753 0
William H. Donaldson 101,849,827 996,529 0
Barbara H. Franklin 101,671,355 1,175,001 0
Earl G. Graves 101,820,418 1,025,938 0
Gerald Greenwald 97,329,053 5,517,303 0
Ellen M. Hancock 101,809,397 1,036,959 0
Michael H. Jordan 101,677,732 1,168,624 0
Jack D. Kuehler 101,844,737 1,001,619 0
Frank R. O'Keefe, Jr. 101,868,149 978,207 0
</TABLE>
(c) Other matters voted upon:
<TABLE>
<CAPTION>
Votes Votes Broker
For Against Abstain Non-Votes
_____ _______ _______ _________
<S> <C> <C> <C> <C>
(1) Appointment of
Independent Auditors 101,839,916 672,598 333,842 0
</TABLE>
<PAGE> 53
Item 5. Other Information.
(a) Ratios of Earnings to Fixed Charges and Earnings to
Combined Fixed Charges and Preferred Stock Dividends
The following table sets forth the company's ratio of earnings to
fixed charges and ratio of earnings to combined fixed charges and
preferred stock dividends for the periods indicated.
<TABLE>
<CAPTION>
Six Months Ended Years ended December 31
_____________________________________
June 30, 1995 1994 1993 1992 1991 1990
_________________ ____ ____ ____ ____ ____
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges.... (a) 4.60 (b) .42(c) 2.13 3.03
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends (a) 4.60 (b) .42(c) 2.13 3.03
<FN>
(a) The company reported a pretax loss from continuing operations for the six months ended
June 30, 1995 which was inadequate to cover fixed charges by $229.3 million.
(b) The company reported a pretax loss from continuing operations in 1993 which was
inadequate to cover fixed charges by $1.1 billion.
(c) Earnings were inadequate to cover fixed charges by $112.8 million in 1992.
</TABLE>
For purposes of computing both the ratio of earnings to fixed
charges and the ratio of earnings to combined fixed charges and
preferred stock dividends, "earnings" represent consolidated
earnings from continuing operations before income taxes,
cumulative effect adjustments and extraordinary items plus fixed
charges and minority interest. "Fixed charges" consist of
interest (and the portion of rental expense deemed representative
of the interest factor) and includes the dividends paid to
preferred shareholders of a subsidiary. (See Note 11 of Notes to
Financial Statements in the company's 1994 Annual Report to
Shareholders.) For the six months ended June 30, 1995 and for the
years ended December 31, 1994, 1993, 1992, 1991 and 1990 there was
no preferred stock outstanding. As a result, the ratios of
earnings to combined fixed charges and preferred stock dividends
were the same as the ratios of earnings to fixed charges.
<PAGE> 54
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
(10) Material Contracts.
(10.1) Extension Notice, dated July 17, 1995, of
$500,000,000 Short-Term Credit Agreement dated
July 27, 1994 among Aetna Life and Casualty Company,
the banks listed therein, certain Co-Agents named
therein, Deutsche Bank AG, as Co-Arranger, and Morgan
Guaranty Trust Company of New York, as Managing Agent.
(12) Statement Re Computation of Ratios.
(12.1) Computation of ratio of earnings to fixed charges and
ratio of earnings to combined fixed charges and
preferred stock dividends for the six months ended
June 30, 1995 and for the years ended December 31,
1994, 1993, 1992, 1991 and 1990.
(15) Letter Re Unaudited Interim Financial Information.
(15.1) Letter from KPMG Peat Marwick LLP acknowledging
awareness of the use of a report on unaudited
interim financial information, dated
July 28, 1995.
(27) Financial Data Schedule.
(b) Reports on Form 8-K
None.
<PAGE> 55
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
Aetna Life and Casualty Company
_______________________________
(Registrant)
Date July 28, 1995 By /s/ ROBERT J. PRICE
_____________________________________
(Signature)
Robert J. Price
Vice President and
Corporate Controller
(Chief Accounting Officer)
EXTENSION NOTICE - April 24, 1995
_________________________________
To the Banks party to the Credit Agreement referred to below:
c/o Morgan Guaranty Trust Company of New York, as Managing Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
Aetna Life and Casualty Company (the "Borrower") hereby requests
that the Commitments under the Short-Term Credit Agreement dated
as of July 27, 1994 (the "Credit Agreement") among the Borrower,
the Banks listed therein, certain Co-Agents named therein,
Deutsche Bank AG, as Co-Arranger and Morgan Guaranty Trust Company
of New York, as Managing Agent, be extended pursuant to Section
2.16 of the Credit Agreement. The Extension Date is July 17, 1995
and the Extended Maturity Date is July 15, 1996. Each Bank that
is willing to extend its Commitment as provided above is requested
to countersign a copy of this notice and return it to the
Borrower, with a copy to the Agent, as promptly as possible, but
in any event prior to the Extension Date specified above; provided
________
that such Bank may revoke its agreement to so extend its
Commitment at any time on or prior to the Extension Date by
written notice to the Borrower delivered to the Borrower on or
prior to the Extension Date. Terms defined in the Credit
Agreement are used herein as therein defined.
This extension Notice shall be construed in accordance with and
governed by the law of the State of New York.
AETNA LIFE AND CASUALTY COMPANY
By /s/ Robert E. Broatch
___________________________________
Robert E. Broatch
Senior Vice President - Finance
The undersigned Bank is willing to extend
its Commitment as specified above:
Name of Bank: Morgan Guaranty Trust Co. of New York
_________________________________________
By: /s/ Jerry J. Fall
_________________________________________
Title: Vice President
_________________________________________
EXTENSION NOTICE - April 24, 1995
_________________________________
To the Banks party to the Credit Agreement referred to below:
c/o Morgan Guaranty Trust Company of New York, as Managing Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
Aetna Life and Casualty Company (the "Borrower") hereby requests
that the Commitments under the Short-Term Credit Agreement dated
as of July 27, 1994 (the "Credit Agreement") among the Borrower,
the Banks listed therein, certain Co-Agents named therein,
Deutsche Bank AG, as Co-Arranger and Morgan Guaranty Trust Company
of New York, as Managing Agent, be extended pursuant to Section
2.16 of the Credit Agreement. The Extension Date is July 17, 1995
and the Extended Maturity Date is July 15, 1996. Each Bank that
is willing to extend its Commitment as provided above is requested
to countersign a copy of this notice and return it to the
Borrower, with a copy to the Agent, as promptly as possible, but
in any event prior to the Extension Date specified above; provided
________
that such Bank may revoke its agreement to so extend its
Commitment at any time on or prior to the Extension Date by
written notice to the Borrower delivered to the Borrower on or
prior to the Extension Date. Terms defined in the Credit
Agreement are used herein as therein defined.
This extension Notice shall be construed in accordance with and
governed by the law of the State of New York.
AETNA LIFE AND CASUALTY COMPANY
By /s/ Robert E. Broatch
___________________________________
Robert E. Broatch
Senior Vice President - Finance
The undersigned Bank is willing to extend
its Commitment as specified above:
Name of Bank: Deutsche Bank AG
___________________________________________
By: /s/ David E. Moyer /s/ Gayma Z. Shivnarain
___________________________________________
Title: Vice President Vice President
___________________________________________
EXTENSION NOTICE - April 24, 1995
_________________________________
To the Banks party to the Credit Agreement referred to below:
c/o Morgan Guaranty Trust Company of New York, as Managing Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
Aetna Life and Casualty Company (the "Borrower") hereby requests
that the Commitments under the Short-Term Credit Agreement dated
as of July 27, 1994 (the "Credit Agreement") among the Borrower,
the Banks listed therein, certain Co-Agents named therein,
Deutsche Bank AG, as Co-Arranger and Morgan Guaranty Trust Company
of New York, as Managing Agent, be extended pursuant to Section
2.16 of the Credit Agreement. The Extension Date is July 17, 1995
and the Extended Maturity Date is July 15, 1996. Each Bank that
is willing to extend its Commitment as provided above is requested
to countersign a copy of this notice and return it to the
Borrower, with a copy to the Agent, as promptly as possible, but
in any event prior to the Extension Date specified above; provided
________
that such Bank may revoke its agreement to so extend its
Commitment at any time on or prior to the Extension Date by
written notice to the Borrower delivered to the Borrower on or
prior to the Extension Date. Terms defined in the Credit
Agreement are used herein as therein defined.
This extension Notice shall be construed in accordance with and
governed by the law of the State of New York.
AETNA LIFE AND CASUALTY COMPANY
By /s/ Robert E. Broatch
___________________________________
Robert E. Broatch
Senior Vice President - Finance
The undersigned Bank is willing to extend
its Commitment as specified above:
Name of Bank: The Chase Manhattan Bank NA
_________________________________________
By: /s/ Candace R. Lau-Hansen
_________________________________________
Title: Vice President
_________________________________________
EXTENSION NOTICE - April 24, 1995
_________________________________
To the Banks party to the Credit Agreement referred to below:
c/o Morgan Guaranty Trust Company of New York, as Managing Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
Aetna Life and Casualty Company (the "Borrower") hereby requests
that the Commitments under the Short-Term Credit Agreement dated
as of July 27, 1994 (the "Credit Agreement") among the Borrower,
the Banks listed therein, certain Co-Agents named therein,
Deutsche Bank AG, as Co-Arranger and Morgan Guaranty Trust Company
of New York, as Managing Agent, be extended pursuant to Section
2.16 of the Credit Agreement. The Extension Date is July 17, 1995
and the Extended Maturity Date is July 15, 1996. Each Bank that
is willing to extend its Commitment as provided above is requested
to countersign a copy of this notice and return it to the
Borrower, with a copy to the Agent, as promptly as possible, but
in any event prior to the Extension Date specified above; provided
________
that such Bank may revoke its agreement to so extend its
Commitment at any time on or prior to the Extension Date by
written notice to the Borrower delivered to the Borrower on or
prior to the Extension Date. Terms defined in the Credit
Agreement are used herein as therein defined.
This extension Notice shall be construed in accordance with and
governed by the law of the State of New York.
AETNA LIFE AND CASUALTY COMPANY
By /s/ Robert E. Broatch
___________________________________
Robert E. Broatch
Senior Vice President - Finance
The undersigned Bank is willing to extend
its Commitment as specified above:
Name of Bank: Citibank N.A.
_________________________________________
By: /s/ Scott F. Engle
_________________________________________
Title: Attorney-In-Fact
_________________________________________
EXTENSION NOTICE - April 24, 1995
_________________________________
To the Banks party to the Credit Agreement referred to below:
c/o Morgan Guaranty Trust Company of New York, as Managing Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
Aetna Life and Casualty Company (the "Borrower") hereby requests
that the Commitments under the Short-Term Credit Agreement dated
as of July 27, 1994 (the "Credit Agreement") among the Borrower,
the Banks listed therein, certain Co-Agents named therein,
Deutsche Bank AG, as Co-Arranger and Morgan Guaranty Trust Company
of New York, as Managing Agent, be extended pursuant to Section
2.16 of the Credit Agreement. The Extension Date is July 17, 1995
and the Extended Maturity Date is July 15, 1996. Each Bank that
is willing to extend its Commitment as provided above is requested
to countersign a copy of this notice and return it to the
Borrower, with a copy to the Agent, as promptly as possible, but
in any event prior to the Extension Date specified above; provided
________
that such Bank may revoke its agreement to so extend its
Commitment at any time on or prior to the Extension Date by
written notice to the Borrower delivered to the Borrower on or
prior to the Extension Date. Terms defined in the Credit
Agreement are used herein as therein defined.
This extension Notice shall be construed in accordance with and
governed by the law of the State of New York.
AETNA LIFE AND CASUALTY COMPANY
By /s/ Robert E. Broatch
___________________________________
Robert E. Broatch
Senior Vice President - Finance
The undersigned Bank is willing to extend
its Commitment as specified above:
Name of Bank: Credit Suisse
_________________________________________________
By: /s/ Juerg Johner /s/ Michael C. Mast
_________________________________________________
Title: Associate Member of Senior Management
_________________________________________________
EXTENSION NOTICE - April 24, 1995
_________________________________
To the Banks party to the Credit Agreement referred to below:
c/o Morgan Guaranty Trust Company of New York, as Managing Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
Aetna Life and Casualty Company (the "Borrower") hereby requests
that the Commitments under the Short-Term Credit Agreement dated
as of July 27, 1994 (the "Credit Agreement") among the Borrower,
the Banks listed therein, certain Co-Agents named therein,
Deutsche Bank AG, as Co-Arranger and Morgan Guaranty Trust Company
of New York, as Managing Agent, be extended pursuant to Section
2.16 of the Credit Agreement. The Extension Date is July 17, 1995
and the Extended Maturity Date is July 15, 1996. Each Bank that
is willing to extend its Commitment as provided above is requested
to countersign a copy of this notice and return it to the
Borrower, with a copy to the Agent, as promptly as possible, but
in any event prior to the Extension Date specified above; provided
________
that such Bank may revoke its agreement to so extend its
Commitment at any time on or prior to the Extension Date by
written notice to the Borrower delivered to the Borrower on or
prior to the Extension Date. Terms defined in the Credit
Agreement are used herein as therein defined.
This extension Notice shall be construed in accordance with and
governed by the law of the State of New York.
AETNA LIFE AND CASUALTY COMPANY
By /s/ Robert E. Broatch
___________________________________
Robert E. Broatch
Senior Vice President - Finance
The undersigned Bank is willing to extend
its Commitment as specified above:
Name of Bank: Bank of America
_________________________________________
By: /s/ Colleen P. Mullins
_________________________________________
Title: Managing Director
_________________________________________
EXTENSION NOTICE - April 24, 1995
_________________________________
To the Banks party to the Credit Agreement referred to below:
c/o Morgan Guaranty Trust Company of New York, as Managing Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
Aetna Life and Casualty Company (the "Borrower") hereby requests
that the Commitments under the Short-Term Credit Agreement dated
as of July 27, 1994 (the "Credit Agreement") among the Borrower,
the Banks listed therein, certain Co-Agents named therein,
Deutsche Bank AG, as Co-Arranger and Morgan Guaranty Trust Company
of New York, as Managing Agent, be extended pursuant to Section
2.16 of the Credit Agreement. The Extension Date is July 17, 1995
and the Extended Maturity Date is July 15, 1996. Each Bank that
is willing to extend its Commitment as provided above is requested
to countersign a copy of this notice and return it to the
Borrower, with a copy to the Agent, as promptly as possible, but
in any event prior to the Extension Date specified above; provided
________
that such Bank may revoke its agreement to so extend its
Commitment at any time on or prior to the Extension Date by
written notice to the Borrower delivered to the Borrower on or
prior to the Extension Date. Terms defined in the Credit
Agreement are used herein as therein defined.
This extension Notice shall be construed in accordance with and
governed by the law of the State of New York.
AETNA LIFE AND CASUALTY COMPANY
By /s/ Robert E. Broatch
___________________________________
Robert E. Broatch
Senior Vice President - Finance
The undersigned Bank is willing to extend
its Commitment as specified above:
Name of Bank: First National Bank of Chicago
_________________________________________
By: /s/ Thomas J. Collimore
_________________________________________
Title: Vice President
_________________________________________
EXTENSION NOTICE - April 24, 1995
_________________________________
To the Banks party to the Credit Agreement referred to below:
c/o Morgan Guaranty Trust Company of New York, as Managing Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
Aetna Life and Casualty Company (the "Borrower") hereby requests
that the Commitments under the Short-Term Credit Agreement dated
as of July 27, 1994 (the "Credit Agreement") among the Borrower,
the Banks listed therein, certain Co-Agents named therein,
Deutsche Bank AG, as Co-Arranger and Morgan Guaranty Trust Company
of New York, as Managing Agent, be extended pursuant to Section
2.16 of the Credit Agreement. The Extension Date is July 17, 1995
and the Extended Maturity Date is July 15, 1996. Each Bank that
is willing to extend its Commitment as provided above is requested
to countersign a copy of this notice and return it to the
Borrower, with a copy to the Agent, as promptly as possible, but
in any event prior to the Extension Date specified above; provided
________
that such Bank may revoke its agreement to so extend its
Commitment at any time on or prior to the Extension Date by
written notice to the Borrower delivered to the Borrower on or
prior to the Extension Date. Terms defined in the Credit
Agreement are used herein as therein defined.
This extension Notice shall be construed in accordance with and
governed by the law of the State of New York.
AETNA LIFE AND CASUALTY COMPANY
By /s/ Robert E. Broatch
___________________________________
Robert E. Broatch
Senior Vice President - Finance
The undersigned Bank is willing to extend
its Commitment as specified above:
Name of Bank: Fleet Bank, N.A.
_________________________________________
By: /s/ Jan-Gee W. McCollam
_________________________________________
Title: Sr. Vice President
_________________________________________
EXTENSION NOTICE - April 24, 1995
_________________________________
To the Banks party to the Credit Agreement referred to below:
c/o Morgan Guaranty Trust Company of New York, as Managing Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
Aetna Life and Casualty Company (the "Borrower") hereby requests
that the Commitments under the Short-Term Credit Agreement dated
as of July 27, 1994 (the "Credit Agreement") among the Borrower,
the Banks listed therein, certain Co-Agents named therein,
Deutsche Bank AG, as Co-Arranger and Morgan Guaranty Trust Company
of New York, as Managing Agent, be extended pursuant to Section
2.16 of the Credit Agreement. The Extension Date is July 17, 1995
and the Extended Maturity Date is July 15, 1996. Each Bank that
is willing to extend its Commitment as provided above is requested
to countersign a copy of this notice and return it to the
Borrower, with a copy to the Agent, as promptly as possible, but
in any event prior to the Extension Date specified above; provided
________
that such Bank may revoke its agreement to so extend its
Commitment at any time on or prior to the Extension Date by
written notice to the Borrower delivered to the Borrower on or
prior to the Extension Date. Terms defined in the Credit
Agreement are used herein as therein defined.
This extension Notice shall be construed in accordance with and
governed by the law of the State of New York.
AETNA LIFE AND CASUALTY COMPANY
By /s/ Robert E. Broatch
___________________________________
Robert E. Broatch
Senior Vice President - Finance
The undersigned Bank is willing to extend
its Commitment as specified above:
Name of Bank: Mellon Bank, N.A.
_________________________________________
By: /s/ Karen E. McConomy
_________________________________________
Title: Banking Officer
_________________________________________
EXTENSION NOTICE - April 24, 1995
_________________________________
To the Banks party to the Credit Agreement referred to below:
c/o Morgan Guaranty Trust Company of New York, as Managing Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
Aetna Life and Casualty Company (the "Borrower") hereby requests
that the Commitments under the Short-Term Credit Agreement dated
as of July 27, 1994 (the "Credit Agreement") among the Borrower,
the Banks listed therein, certain Co-Agents named therein,
Deutsche Bank AG, as Co-Arranger and Morgan Guaranty Trust Company
of New York, as Managing Agent, be extended pursuant to Section
2.16 of the Credit Agreement. The Extension Date is July 17, 1995
and the Extended Maturity Date is July 15, 1996. Each Bank that
is willing to extend its Commitment as provided above is requested
to countersign a copy of this notice and return it to the
Borrower, with a copy to the Agent, as promptly as possible, but
in any event prior to the Extension Date specified above; provided
________
that such Bank may revoke its agreement to so extend its
Commitment at any time on or prior to the Extension Date by
written notice to the Borrower delivered to the Borrower on or
prior to the Extension Date. Terms defined in the Credit
Agreement are used herein as therein defined.
This extension Notice shall be construed in accordance with and
governed by the law of the State of New York.
AETNA LIFE AND CASUALTY COMPANY
By /s/ Robert E. Broatch
___________________________________
Robert E. Broatch
Senior Vice President - Finance
The undersigned Bank is willing to extend
its Commitment as specified above:
Name of Bank: Nations Bank
_________________________________________
By: /s/ Frank R. Callison
_________________________________________
Title: Vice President
_________________________________________
EXTENSION NOTICE - April 24, 1995
_________________________________
To the Banks party to the Credit Agreement referred to below:
c/o Morgan Guaranty Trust Company of New York, as Managing Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
Aetna Life and Casualty Company (the "Borrower") hereby requests
that the Commitments under the Short-Term Credit Agreement dated
as of July 27, 1994 (the "Credit Agreement") among the Borrower,
the Banks listed therein, certain Co-Agents named therein,
Deutsche Bank AG, as Co-Arranger and Morgan Guaranty Trust Company
of New York, as Managing Agent, be extended pursuant to Section
2.16 of the Credit Agreement. The Extension Date is July 17, 1995
and the Extended Maturity Date is July 15, 1996. Each Bank that
is willing to extend its Commitment as provided above is requested
to countersign a copy of this notice and return it to the
Borrower, with a copy to the Agent, as promptly as possible, but
in any event prior to the Extension Date specified above; provided
________
that such Bank may revoke its agreement to so extend its
Commitment at any time on or prior to the Extension Date by
written notice to the Borrower delivered to the Borrower on or
prior to the Extension Date. Terms defined in the Credit
Agreement are used herein as therein defined.
This extension Notice shall be construed in accordance with and
governed by the law of the State of New York.
AETNA LIFE AND CASUALTY COMPANY
By /s/ Robert E. Broatch
___________________________________
Robert E. Broatch
Senior Vice President - Finance
The undersigned Bank is willing to extend
its Commitment as specified above:
Name of Bank: Shawmut Bank
_________________________________________
By: /s/ Jeffrey A. Simpson
_________________________________________
Title: Assistant Vice President
_________________________________________
EXTENSION NOTICE - April 24, 1995
_________________________________
To the Banks party to the Credit Agreement referred to below:
c/o Morgan Guaranty Trust Company of New York, as Managing Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
Aetna Life and Casualty Company (the "Borrower") hereby requests
that the Commitments under the Short-Term Credit Agreement dated
as of July 27, 1994 (the "Credit Agreement") among the Borrower,
the Banks listed therein, certain Co-Agents named therein,
Deutsche Bank AG, as Co-Arranger and Morgan Guaranty Trust Company
of New York, as Managing Agent, be extended pursuant to Section
2.16 of the Credit Agreement. The Extension Date is July 17, 1995
and the Extended Maturity Date is July 15, 1996. Each Bank that
is willing to extend its Commitment as provided above is requested
to countersign a copy of this notice and return it to the
Borrower, with a copy to the Agent, as promptly as possible, but
in any event prior to the Extension Date specified above; provided
________
that such Bank may revoke its agreement to so extend its
Commitment at any time on or prior to the Extension Date by
written notice to the Borrower delivered to the Borrower on or
prior to the Extension Date. Terms defined in the Credit
Agreement are used herein as therein defined.
This extension Notice shall be construed in accordance with and
governed by the law of the State of New York.
AETNA LIFE AND CASUALTY COMPANY
By /s/ Robert E. Broatch
___________________________________
Robert E. Broatch
Senior Vice President - Finance
The undersigned Bank is willing to extend
its Commitment as specified above:
Name of Bank: Toronto Dominion Bank
_________________________________________
By: /s/ W. Reg Waylen
_________________________________________
Title: Managing Director
_________________________________________
EXTENSION NOTICE - April 24, 1995
_________________________________
To the Banks party to the Credit Agreement referred to below:
c/o Morgan Guaranty Trust Company of New York, as Managing Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
Aetna Life and Casualty Company (the "Borrower") hereby requests
that the Commitments under the Short-Term Credit Agreement dated
as of July 27, 1994 (the "Credit Agreement") among the Borrower,
the Banks listed therein, certain Co-Agents named therein,
Deutsche Bank AG, as Co-Arranger and Morgan Guaranty Trust Company
of New York, as Managing Agent, be extended pursuant to Section
2.16 of the Credit Agreement. The Extension Date is July 17, 1995
and the Extended Maturity Date is July 15, 1996. Each Bank that
is willing to extend its Commitment as provided above is requested
to countersign a copy of this notice and return it to the
Borrower, with a copy to the Agent, as promptly as possible, but
in any event prior to the Extension Date specified above; provided
________
that such Bank may revoke its agreement to so extend its
Commitment at any time on or prior to the Extension Date by
written notice to the Borrower delivered to the Borrower on or
prior to the Extension Date. Terms defined in the Credit
Agreement are used herein as therein defined.
This extension Notice shall be construed in accordance with and
governed by the law of the State of New York.
AETNA LIFE AND CASUALTY COMPANY
By /s/ Robert E. Broatch
___________________________________
Robert E. Broatch
Senior Vice President - Finance
The undersigned Bank is willing to extend
its Commitment as specified above:
Name of Bank: Chemical Bank
_________________________________________
By: /s/ Peter W. Platten
_________________________________________
Title: Vice President
_________________________________________
EXTENSION NOTICE - April 24, 1995
_________________________________
To the Banks party to the Credit Agreement referred to below:
c/o Morgan Guaranty Trust Company of New York, as Managing Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
Aetna Life and Casualty Company (the "Borrower") hereby requests
that the Commitments under the Short-Term Credit Agreement dated
as of July 27, 1994 (the "Credit Agreement") among the Borrower,
the Banks listed therein, certain Co-Agents named therein,
Deutsche Bank AG, as Co-Arranger and Morgan Guaranty Trust Company
of New York, as Managing Agent, be extended pursuant to Section
2.16 of the Credit Agreement. The Extension Date is July 17, 1995
and the Extended Maturity Date is July 15, 1996. Each Bank that
is willing to extend its Commitment as provided above is requested
to countersign a copy of this notice and return it to the
Borrower, with a copy to the Agent, as promptly as possible, but
in any event prior to the Extension Date specified above; provided
________
that such Bank may revoke its agreement to so extend its
Commitment at any time on or prior to the Extension Date by
written notice to the Borrower delivered to the Borrower on or
prior to the Extension Date. Terms defined in the Credit
Agreement are used herein as therein defined.
This extension Notice shall be construed in accordance with and
governed by the law of the State of New York.
AETNA LIFE AND CASUALTY COMPANY
By /s/ Robert E. Broatch
___________________________________
Robert E. Broatch
Senior Vice President - Finance
The undersigned Bank is willing to extend
its Commitment as specified above:
Name of Bank: CoreStates Bank, NA
_________________________________________
By: /s/ Tom Singleton
_________________________________________
Title: Vice President
_________________________________________
EXTENSION NOTICE - April 24, 1995
_________________________________
To the Banks party to the Credit Agreement referred to below:
c/o Morgan Guaranty Trust Company of New York, as Managing Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
Aetna Life and Casualty Company (the "Borrower") hereby requests
that the Commitments under the Short-Term Credit Agreement dated
as of July 27, 1994 (the "Credit Agreement") among the Borrower,
the Banks listed therein, certain Co-Agents named therein,
Deutsche Bank AG, as Co-Arranger and Morgan Guaranty Trust Company
of New York, as Managing Agent, be extended pursuant to Section
2.16 of the Credit Agreement. The Extension Date is July 17, 1995
and the Extended Maturity Date is July 15, 1996. Each Bank that
is willing to extend its Commitment as provided above is requested
to countersign a copy of this notice and return it to the
Borrower, with a copy to the Agent, as promptly as possible, but
in any event prior to the Extension Date specified above; provided
________
that such Bank may revoke its agreement to so extend its
Commitment at any time on or prior to the Extension Date by
written notice to the Borrower delivered to the Borrower on or
prior to the Extension Date. Terms defined in the Credit
Agreement are used herein as therein defined.
This extension Notice shall be construed in accordance with and
governed by the law of the State of New York.
AETNA LIFE AND CASUALTY COMPANY
By /s/ Robert E. Broatch
___________________________________
Robert E. Broatch
Senior Vice President - Finance
The undersigned Bank is willing to extend
its Commitment as specified above:
Name of Bank: Credit Lyonnais New York
_________________________________________
By: /s/ Renaud D'Herbes
_________________________________________
Title: First Vice President
_________________________________________
EXTENSION NOTICE - April 24, 1995
_________________________________
To the Banks party to the Credit Agreement referred to below:
c/o Morgan Guaranty Trust Company of New York, as Managing Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
Aetna Life and Casualty Company (the "Borrower") hereby requests
that the Commitments under the Short-Term Credit Agreement dated
as of July 27, 1994 (the "Credit Agreement") among the Borrower,
the Banks listed therein, certain Co-Agents named therein,
Deutsche Bank AG, as Co-Arranger and Morgan Guaranty Trust Company
of New York, as Managing Agent, be extended pursuant to Section
2.16 of the Credit Agreement. The Extension Date is July 17, 1995
and the Extended Maturity Date is July 15, 1996. Each Bank that
is willing to extend its Commitment as provided above is requested
to countersign a copy of this notice and return it to the
Borrower, with a copy to the Agent, as promptly as possible, but
in any event prior to the Extension Date specified above; provided
________
that such Bank may revoke its agreement to so extend its
Commitment at any time on or prior to the Extension Date by
written notice to the Borrower delivered to the Borrower on or
prior to the Extension Date. Terms defined in the Credit
Agreement are used herein as therein defined.
This extension Notice shall be construed in accordance with and
governed by the law of the State of New York.
AETNA LIFE AND CASUALTY COMPANY
By /s/ Robert E. Broatch
___________________________________
Robert E. Broatch
Senior Vice President - Finance
The undersigned Bank is willing to extend
its Commitment as specified above:
Name of Bank: The Dai-Ichi Kangyo Bank, Ltd., New York Branch
_______________________________________________
By: /s/ Kim P. Leary
_________________________________________
Title: Vice President
_________________________________________
EXTENSION NOTICE - April 24, 1995
_________________________________
To the Banks party to the Credit Agreement referred to below:
c/o Morgan Guaranty Trust Company of New York, as Managing Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
Aetna Life and Casualty Company (the "Borrower") hereby requests
that the Commitments under the Short-Term Credit Agreement dated
as of July 27, 1994 (the "Credit Agreement") among the Borrower,
the Banks listed therein, certain Co-Agents named therein,
Deutsche Bank AG, as Co-Arranger and Morgan Guaranty Trust Company
of New York, as Managing Agent, be extended pursuant to Section
2.16 of the Credit Agreement. The Extension Date is July 17, 1995
and the Extended Maturity Date is July 15, 1996. Each Bank that
is willing to extend its Commitment as provided above is requested
to countersign a copy of this notice and return it to the
Borrower, with a copy to the Agent, as promptly as possible, but
in any event prior to the Extension Date specified above; provided
________
that such Bank may revoke its agreement to so extend its
Commitment at any time on or prior to the Extension Date by
written notice to the Borrower delivered to the Borrower on or
prior to the Extension Date. Terms defined in the Credit
Agreement are used herein as therein defined.
This extension Notice shall be construed in accordance with and
governed by the law of the State of New York.
AETNA LIFE AND CASUALTY COMPANY
By /s/ Robert E. Broatch
___________________________________
Robert E. Broatch
Senior Vice President - Finance
The undersigned Bank is willing to extend
its Commitment as specified above:
Name of Bank: First Interstate Bank of California
_________________________________________
By: /s/ Thomas J. Helotes
_________________________________________
Title: Vice President
_________________________________________
EXTENSION NOTICE - April 24, 1995
_________________________________
To the Banks party to the Credit Agreement referred to below:
c/o Morgan Guaranty Trust Company of New York, as Managing Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
Aetna Life and Casualty Company (the "Borrower") hereby requests
that the Commitments under the Short-Term Credit Agreement dated
as of July 27, 1994 (the "Credit Agreement") among the Borrower,
the Banks listed therein, certain Co-Agents named therein,
Deutsche Bank AG, as Co-Arranger and Morgan Guaranty Trust Company
of New York, as Managing Agent, be extended pursuant to Section
2.16 of the Credit Agreement. The Extension Date is July 17, 1995
and the Extended Maturity Date is July 15, 1996. Each Bank that
is willing to extend its Commitment as provided above is requested
to countersign a copy of this notice and return it to the
Borrower, with a copy to the Agent, as promptly as possible, but
in any event prior to the Extension Date specified above; provided
________
that such Bank may revoke its agreement to so extend its
Commitment at any time on or prior to the Extension Date by
written notice to the Borrower delivered to the Borrower on or
prior to the Extension Date. Terms defined in the Credit
Agreement are used herein as therein defined.
This extension Notice shall be construed in accordance with and
governed by the law of the State of New York.
AETNA LIFE AND CASUALTY COMPANY
By /s/ Robert E. Broatch
___________________________________
Robert E. Broatch
Senior Vice President - Finance
The undersigned Bank is willing to extend
its Commitment as specified above:
Name of Bank: First National Bank of Boston
_________________________________________
By: /s/ Charles A. Garrity
_________________________________________
Title: V.P.
_________________________________________
EXTENSION NOTICE - April 24, 1995
_________________________________
To the Banks party to the Credit Agreement referred to below:
c/o Morgan Guaranty Trust Company of New York, as Managing Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
Aetna Life and Casualty Company (the "Borrower") hereby requests
that the Commitments under the Short-Term Credit Agreement dated
as of July 27, 1994 (the "Credit Agreement") among the Borrower,
the Banks listed therein, certain Co-Agents named therein,
Deutsche Bank AG, as Co-Arranger and Morgan Guaranty Trust Company
of New York, as Managing Agent, be extended pursuant to Section
2.16 of the Credit Agreement. The Extension Date is July 17, 1995
and the Extended Maturity Date is July 15, 1996. Each Bank that
is willing to extend its Commitment as provided above is requested
to countersign a copy of this notice and return it to the
Borrower, with a copy to the Agent, as promptly as possible, but
in any event prior to the Extension Date specified above; provided
________
that such Bank may revoke its agreement to so extend its
Commitment at any time on or prior to the Extension Date by
written notice to the Borrower delivered to the Borrower on or
prior to the Extension Date. Terms defined in the Credit
Agreement are used herein as therein defined.
This extension Notice shall be construed in accordance with and
governed by the law of the State of New York.
AETNA LIFE AND CASUALTY COMPANY
By /s/ Robert E. Broatch
___________________________________
Robert E. Broatch
Senior Vice President - Finance
The undersigned Bank is willing to extend
its Commitment as specified above:
Name of Bank: The Northern Trust Co.
_________________________________________
By: /s/ Dean V. Banick
_________________________________________
Title: Vice President
_________________________________________
EXTENSION NOTICE - April 24, 1995
_________________________________
To the Banks party to the Credit Agreement referred to below:
c/o Morgan Guaranty Trust Company of New York, as Managing Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
Aetna Life and Casualty Company (the "Borrower") hereby requests
that the Commitments under the Short-Term Credit Agreement dated
as of July 27, 1994 (the "Credit Agreement") among the Borrower,
the Banks listed therein, certain Co-Agents named therein,
Deutsche Bank AG, as Co-Arranger and Morgan Guaranty Trust Company
of New York, as Managing Agent, be extended pursuant to Section
2.16 of the Credit Agreement. The Extension Date is July 17, 1995
and the Extended Maturity Date is July 15, 1996. Each Bank that
is willing to extend its Commitment as provided above is requested
to countersign a copy of this notice and return it to the
Borrower, with a copy to the Agent, as promptly as possible, but
in any event prior to the Extension Date specified above; provided
________
that such Bank may revoke its agreement to so extend its
Commitment at any time on or prior to the Extension Date by
written notice to the Borrower delivered to the Borrower on or
prior to the Extension Date. Terms defined in the Credit
Agreement are used herein as therein defined.
This extension Notice shall be construed in accordance with and
governed by the law of the State of New York.
AETNA LIFE AND CASUALTY COMPANY
By /s/ Robert E. Broatch
___________________________________
Robert E. Broatch
Senior Vice President - Finance
The undersigned Bank is willing to extend
its Commitment as specified above:
Name of Bank: State Street Bank and Trust Company
_________________________________________
By: /s/ Robert P. Engvall, Jr.
_________________________________________
Title: Vice President
_________________________________________
EXTENSION NOTICE - April 24, 1995
_________________________________
To the Banks party to the Credit Agreement referred to below:
c/o Morgan Guaranty Trust Company of New York, as Managing Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
Aetna Life and Casualty Company (the "Borrower") hereby requests
that the Commitments under the Short-Term Credit Agreement dated
as of July 27, 1994 (the "Credit Agreement") among the Borrower,
the Banks listed therein, certain Co-Agents named therein,
Deutsche Bank AG, as Co-Arranger and Morgan Guaranty Trust Company
of New York, as Managing Agent, be extended pursuant to Section
2.16 of the Credit Agreement. The Extension Date is July 17, 1995
and the Extended Maturity Date is July 15, 1996. Each Bank that
is willing to extend its Commitment as provided above is requested
to countersign a copy of this notice and return it to the
Borrower, with a copy to the Agent, as promptly as possible, but
in any event prior to the Extension Date specified above; provided
________
that such Bank may revoke its agreement to so extend its
Commitment at any time on or prior to the Extension Date by
written notice to the Borrower delivered to the Borrower on or
prior to the Extension Date. Terms defined in the Credit
Agreement are used herein as therein defined.
This extension Notice shall be construed in accordance with and
governed by the law of the State of New York.
AETNA LIFE AND CASUALTY COMPANY
By /s/ Robert E. Broatch
___________________________________
Robert E. Broatch
Senior Vice President - Finance
The undersigned Bank is willing to extend
its Commitment as specified above:
Name of Bank: The Sumitomo Bank, Limited
_________________________________________
By: /s/ Shuntaro Higashi
_________________________________________
Title: Joint General Manager
_________________________________________
EXTENSION NOTICE - April 24, 1995
_________________________________
To the Banks party to the Credit Agreement referred to below:
c/o Morgan Guaranty Trust Company of New York, as Managing Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
Aetna Life and Casualty Company (the "Borrower") hereby requests
that the Commitments under the Short-Term Credit Agreement dated
as of July 27, 1994 (the "Credit Agreement") among the Borrower,
the Banks listed therein, certain Co-Agents named therein,
Deutsche Bank AG, as Co-Arranger and Morgan Guaranty Trust Company
of New York, as Managing Agent, be extended pursuant to Section
2.16 of the Credit Agreement. The Extension Date is July 17, 1995
and the Extended Maturity Date is July 15, 1996. Each Bank that
is willing to extend its Commitment as provided above is requested
to countersign a copy of this notice and return it to the
Borrower, with a copy to the Agent, as promptly as possible, but
in any event prior to the Extension Date specified above; provided
________
that such Bank may revoke its agreement to so extend its
Commitment at any time on or prior to the Extension Date by
written notice to the Borrower delivered to the Borrower on or
prior to the Extension Date. Terms defined in the Credit
Agreement are used herein as therein defined.
This extension Notice shall be construed in accordance with and
governed by the law of the State of New York.
AETNA LIFE AND CASUALTY COMPANY
By /s/ Robert E. Broatch
___________________________________
Robert E. Broatch
Senior Vice President - Finance
The undersigned Bank is willing to extend
its Commitment as specified above:
Name of Bank: Wachovia Bank of Georgia
_________________________________________
By: /s/ Jeffrey S. Nurkiewicz
_________________________________________
Title: Commercial Banking Officer
_________________________________________
<PAGE> 1
AETNA LIFE AND CASUALTY COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF
EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
Six Months Ended Years Ended December 31,
________________ _________________________________________________________
(Millions) June 30, 1995 1994 1993 1992 1991 1990
________________ ____ ____ ____ ____ ________
<S> <C> <C> <C> <C> <C> <C>
Pretax income (loss) from
continuing operations........... $ (239.0) $ 658.3 $(1,147.4) $ (121.4) $ 243.5 $ 459.6
Add back fixed charges............ 100.0 186.1 171.0 194.3 221.5 229.0
Minority interest................ 9.7 11.4 7.0 8.6 5.9 4.9
________ _________ _________ ________ ________ ________
Income (loss) as adjusted..... $ (129.3) $ 855.8 $ (969.4) $ 81.5 $ 470.9 $ 693.5
________ _________ _________ ________ ________ ________
________ _________ _________ ________ ________ ________
Fixed charges:
Interest on indebtedness....... $ 58.5(1) $ 98.6(1) $ 77.4 $ 81.4 $ 110.9 $ 119.9
Portion of rents representative
of interest factor............ 41.5 87.5 93.6 112.9 110.6 109.1
________ _________ _________ ________ ________ ________
Total fixed charges........... $ 100.0 $ 186.1 $ 171.0 $ 194.3 $ 221.5 $ 229.0
________ _________ _________ ________ ________ ________
________ _________ _________ ________ ________ ________
Preferred stock dividend
requirements.................... - - - - - -
________ _________ _________ ________ ________ ________
Total combined fixed charges
and preferred stock dividend
requirements.................... $ 100.0 $ 186.1 $ 171.0 $ 194.3 $ 221.5 $ 229.0
________ _________ _________ ________ ________ ________
________ _________ _________ ________ ________ ________
Ratio of earnings to fixed
charges......................... (1.29) 4.60 (5.67) 0.42 2.13 3.03
________ _________ _________ ________ ________ ________
________ _________ _________ ________ ________ ________
Ratio of earnings to combined
fixed charges and preferred
stock dividends................. (1.29) 4.60 (5.67) 0.42 2.13 3.03
________ _________ _________ ________ ________ ________
________ _________ _________ ________ ________ ________
<FN>
(1) Includes the dividends paid to preferred shareholders of a subsidiary.
(See Note 11 of Notes to Financial Statements in the company's 1994 Annual
Report to Shareholders.)
</TABLE>
<PAGE> 1
Letter Re: Unaudited Interim Financial Information
___________________________________________________
Aetna Life and Casualty Company
Hartford, Connecticut
Gentlemen:
Re: Registration Statements No. 2-73911, 2-91514, 33-12993,
33-49543, 33-50427, 33-52819 and 33-52819-01
With respect to the subject registration statements, we
acknowledge our awareness of the use therein of our report dated
July 27, 1995 related to our review of interim financial
information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such
report is not considered a part of a registration statement
prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11
of the Act.
By /s/ KPMG PEAT MARWICK LLP
_____________________________
(Signature)
KPMG Peat Marwick LLP
Hartford, Connecticut
July 28, 1995
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements contained in the Form 10-Q for the quarterly period ended
June 30, 1995 for Aetna Life and Casualty Company and is qualified in its
entirety by reference to such statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<DEBT-HELD-FOR-SALE> 39,583
<DEBT-CARRYING-VALUE> 1,786
<DEBT-MARKET-VALUE> 1,824
<EQUITIES> 1,586
<MORTGAGE> 10,803
<REAL-ESTATE> 1,619
<TOTAL-INVEST> 57,683
<CASH> 2,151
<RECOVER-REINSURE> 5,307
<DEFERRED-ACQUISITION> 2,127
<TOTAL-ASSETS> 99,869
<POLICY-LOSSES> 17,803
<UNEARNED-PREMIUMS> 1,641
<POLICY-OTHER> 18,243
<POLICY-HOLDER-FUNDS> 23,875
<NOTES-PAYABLE> 1,118
<COMMON> 1,416
0
0
<OTHER-SE> 5,237
<TOTAL-LIABILITY-AND-EQUITY> 99,869
5,755
<INVESTMENT-INCOME> 2,227
<INVESTMENT-GAINS> (32)
<OTHER-INCOME> 983
<BENEFITS> 6,890
<UNDERWRITING-AMORTIZATION> 384
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> (239)
<INCOME-TAX> (103)
<INCOME-CONTINUING> (136)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (136)
<EPS-PRIMARY> (1.20)
<EPS-DILUTED> 0<F1>
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1>There is not a significant difference between primary and fully diluted
earnings per share.
</FN>
</TABLE>
