SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
AETNA LIFE AND CASUALTY COMPANY AND U.S. HEALTHCARE, INC.
(Name of Registrant as Specified In Its Charter)
AETNA LIFE AND CASUALTY COMPANY AND U.S. HEALTHCARE, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
Aetna Life and Casualty Company Common Capital Stock without
par value
U.S. Healthcare, Inc. Common Stock, par value $0.005 per share
U.S. Healthcare, Inc. Class B Stock, par value $0.005 per share
(2) Aggregate number of securities to which transaction applies:
115,187,158 shares of Aetna Life and Casualty Company Common
Capital Stock
139,512,162 shares of U.S. Healthcare, Inc. Common Stock
14,429,867 shares of U.S. Healthcare, Inc. Class B Stock
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11
$71.3125 per share of Aetna Life and Casualty Company Common
Capital Stock
$51.9375 per share of U.S. Healthcare, Inc. Common Stock and
per share of U.S. Healthcare, Inc. Class B Stock
(4) Proposed maximum aggregate value of transaction:
$16,209,648,336(1)
- ------------
(1) For purposes of calculating the filing fee only. Upon
consummation of the Mergers, (i) each outstanding share of Aetna Life and
Casualty Company Common Capital Stock without par value will be converted
into the right to receive one share of Aetna Inc. Common Stock, par value
$0.01 per share, together with one right (a "Parent Right") issued pursuant
to a Rights Agreement effective as of the date of the consummation of the
Mergers, and (ii) each outstanding share of U.S. Healthcare, Inc. Common
Stock, par value $0.005 per share, and U.S. Healthcare, Inc. Class B
Stock, par value $0.005 per share, will be converted into the right to
receive (a) 0.2246 shares of Aetna Inc. Common Stock, par value $0.01 per
share, together with 0.2246 Parent Rights, (b) 0.0749 shares of Aetna Inc.
6.25% Class C Voting Preferred Stock, par value $0.01 per share, and (c)
$34.20 in cash. The proposed maximum aggregate value of the transactions
described in the preliminary proxy materials is equal to $16,209,648,336
(calculated based on the sum of (i)(a) the number of shares of Aetna Life
and Casualty Company Common Capital Stock outstanding as of March 31, 1996
times (b) the average of the high and low reported prices of Aetna Life and
Casualty Company Common Capital Stock on April 17, 1996, plus (ii)(a) the
number of shares of U.S. Healthcare, Inc. Common Stock plus the number of
shares of U.S. Healthcare, Inc. Class B Stock outstanding as of March 31,
1996 times (b) the average of the high and low reported prices of U.S.
Healthcare, Inc. Common Stock on April 17, 1996.
[X] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the form or schedule and the date
of its filing.
(1) Amount Previously Paid:
$3,241,929.67
(2) Form, Schedule or Registration Statement No.:
Schedule 14A
(3) Filing Party:
Aetna Life and Casualty Company and U.S. Healthcare, Inc.
(4) Date filed:
April 22, 1996
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
Aetna is Predominately a Healthcare Company
Graphics - Pie chart illustrating
HEALTH-Aetna & U.S. Healthcare 68%
INT'L - 9%
ARS 23%
HEALTH 68% broken out
U.S. Healthcare - 22%
Aetna Health Plans - 46%
1995 Combined Revenue of $16.6 billion
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
Aetna and U.S. Healthcare are an Excellent Strategic Fit
Aetna's Strengths
o National Presence
o Strong National Brand Name
o Servicing Multi-Site National Commercial Customers
o Diverse Product Portfolio
o Large National Account Retiree Base
US Healthcare's Strengths
o Medical Management
o Retail Marketing
o Clinical Information Systems
o Competitive Price and Strong Operating Margins
o Quality Measurement and Analysis
o Strong Medicare Growth Results
Combined Strengths
o Quality of Healthcare
o Geographic Diversification and Critical Mass
o Strong Management Talent
o Revenue and Expense Synergies
o Strong Medicare Growth Opportunity
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
Graphic - Time Line
Transaction Closing Within 90 Working Days
<TABLE>
<CAPTION>
April May June-July 7/18 7/19
<S> <C> <C> <C> <C>
o Aetna/U.S. Hart-Scott-Rodino Waiting o CT Hearing Shareholder Transaction
Healthcare Period Expired (6/7) Meetings expected to
Merger (5/13) close
Announced o GA Hearing
(4/1) (6/11)
o Hart-Scott o Proxy
Rodino Filed Prospectus
(4/12) Declared
Effective by
o State SEC (6/12)
Regulatory
Filings Made o Proxy
Prospectus
Distributed
(6/13)
o All State
Approvals
Granted
</TABLE>
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
Integration Ready to Begin
Graphic - Time Line
4/1 April May - July
Integration Begins
Aetna/U.S. o First Integration o Finalized Expanded
Healthcare Merger Team Meeting Held Organization
Announced Structure
o Core Team and o Finalized Synergy
Subteams Formed Assessment and
Action Plan
o Began training for
400 sales and 100
medical delivery
jobs
o Completed full
integration plan
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
After-Tax Enhancements of $300 Million are Achievable
GRAPHIC CHART 0-300
1996 - 1998
1996 1997 1998
Medicare 12 50
National/Commerc 1 10 30
Cross Sell 20 20
Medical 9 23 60
Overlap Markets 2 23 60
Sales & Back Offc 1 60 70
Other/IT 1 20 40
Note: Please see "Factors For Forward Looking Information" in merger
proxy, and please see other SEC documents previsouly filed by
Aetna and U.S. Healthcare
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
Core Team Established
Chairman, CEO & President
Ron Compton
Co-Presidents
Mike Cardillo
Joe Sebastianelli
Core Functions Core Functions
Jim Dickerson - CFO Frolly Boyd - Group
Insurance
Daniel Messina - Rich Wolfson -
Financial Pharmacy
Tom McInerney - Bruce Campbell -
National Accounts Specialty
Products/Healthways
Abbie Leibowitz - Scott Striegel -
Medical Operations
Nick Hanchak - USQA
Tim Nolan -
Sales/Marketing
David Simon - Legal Max Gould -
Information
Technology
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
Marketplace is Shifting to Managed Care
Expanded Organizational Structure Announced
CORE Core Team
o Sets strategy,
policy and
business standards
REGIONS Medical Region Operations
o Delivers (6) Managers (6) (6)
healthcare and
customer service
o Northeasto Dr. Robert Roy o Sal Uglietta o Mary Moriconi
o Mid-Atlantico Dr. Jay Krakovitz o Chuck Scott o Nancy Cocozza
o Southeasto Dr. Sharon Lewis o Scott Murphy o Al Austin
o Mid-Westo Dr. Harold Zarkowski o Ed Dulik o Susan Sullivan
o West Centralo Dr. Jim Tucci o John Coyle o Laurie Brubaker
o Western o Dr. Howard Arkans o Tom Williams o Dan Hoffman
LOCAL
o Focuses on functions General Managers
that need to be close
to the customer: o 33 general managers
sales and provider announced
contracting and relations
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
Americans Aged 64 and under 223 million
Graphic - Two pie charts illustrating 1995 and 1998
Total Population 89,000,000
1995 - 70% Managed Care
30% Traditional Indemnity Plan
2000 - 88% Managed Care
12% Traditional Indemnity Plan
40 Million Shift
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
Medicare is Shifting to Managed Care
Graphic - Two pie charts illustrating 1995 and 1998
Medicare Population 37 million
1995 - 10% HMOs
90% Traditional Fee for Service
2000 - 50% HMOs
50% Traditional Fee for Service
15 Million Shift
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
$100 Million of Revenue Synergies
Graphic - Bar graph:
1998
Medicare 50
National/Commerc 30
Cross Sell 20
Medical 60
Overlap Markets 30
Sales & Back Offic 70
Other/IT 40
Note: Please see "Factors For Forward Looking Information" in merger
proxy, and please see other SEC documents previously filed by
Aetna and U.S. Healthcare
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
Leading Health Care Benefits Company
As of March 31, 1996
(Millions)
Non-Risk Risk Total
---------- ------ -------
HMO 0.3 2.6 2.9
POS 2.6 1.1 3.7
PPO 2.3 1.4 3.7
Indemnity 3.2 0.6 3.8
---------- ------ -------
Total Health 8.4 5.7 14.1
========== ====== =======
60% 40% 100%
========== ====== =======
Specialty Health 22.3 5.0 27.3
========== ====== =======
Note: Please see "Factors For Forward Looking Information" in merger
proxy, and please see other SEC documents previously filed by
Aetna and U.S. Healthcare
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
Overall at Risk
Membership Goals are Conservative
Graphic Chart illustrating 1996 - 1998 Annualized Growth
9.0% Base Growth
1.3% Medicare Synergies
2.7% Commercial Synergies
13.0% Total
Base Plan Assumes - Flat Membership for Aetna Health
- Mid Teens for USHC
Note: Please see "Factors For Forward Looking Information" in merger
proxy, and please see other SEC documents previously filed by
Aetna and U.S. Healthcare
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
Commercial Risk HMO/POS Growth will Accelerate
Graphic Chart illustrating 1996 - 1998 Annualized Growth
9.0% Base Plan
1.3% Medicare Synergies
2.7% Commercial Synergies
13.0% Total
o Minimize Large Account Seepage
o Use Direct Sales Force in non-overlapped markets
Note: Please see "Factors For Forward Looking Information" in merger
proxy, and please see other SEC documents previously filed by
Aetna and U.S. Healthcare
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
Medicare Risk Growth is a Key Component of Revenue Synergies
Graphic Chart illustrating 1996 - 1998 Annualized Growth
9.0% Base Growth
1.3% Medicare Synergies
2.7% Commercial Synergies
13.0% Total
o Entry into 24 Markets by the end of 1998
o Large Account Opportunity
o Assume 3% Market Penetration
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
Cross Selling Opportunities
o Life and Disability Group Products
o Pharmacy
o Other Specialty Health (Dental, Behavioral Science)
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
24 HMO States in 6 Geographic Regions
Graphic Chart - Map of the 48 contiguous states divided into
regions illustrating Aetna, U.S. Healthcare and
their overlap
Western - Tom Williams
West Central - John Coyle
Mid-West - Ed Dulik
Northeast - Sal Uglietta
Mid-Atlantic - Chuck Scott
Southeast - Scott Murphy
AETNA US HEALTHCARE OVERLAP
CA RI NY
AZ MA CT
TX NH MO
LA VA
SC
GA
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
Expansion into 7 States in December 1996
Graphic Chart - Map of the 48 contiguous states divided into
regions illustrating Aetna, U.S. Healthcare and
their overlap, and the 1996 Expansion States
Western - Tom Williams
West Central - John Coyle
Mid-West - Ed Dulik
Northeast - Sal Uglietta
Mid-Atlantic - Chuck Scott
Southeast - Scott Murphy
AETNA US HEALTHCARE OVERLAP
CA RI NY
AZ MA CT
TX NH MO
LA VA
SC
GA
1996 Expansion MI, CO, OK, KS, MO, AK, NV
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
Expansion into 19 States December 1997
Graphic Chart - Map of the 48 contiguous states divided into
regions illustrating Aetna, U.S. Healthcare and
their overlap, the 1996 Expansion and the 1997
Expansion.
Western - Tom Williams
West Central - John Coyle
Mid-West - Ed Dulik
Northeast - Sal Uglietta
Mid-Atlantic - Chuck Scott
Southeast - Scott Murphy
AETNA US HEALTHCARE OVERLAP
CA RI NY
AZ MA CT
TX NH MO
LA VA
SC
GA
1996 Expansion MI, CO, OK, KS, MO, AK, NV
1997 Expansion - VT, ME, AL, MS, WI, OH, NM, VT, WY, ND,SD, NB, IW, MN, Wa,
OR, ID, VT
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
$60 Million of Medical Synergies is Achievable
Graphic Chart
1998
Medicare 50
National/Commerc 30
Cross Sell 20
Medical 60
Overlap Markets 30
Sales & Back Offic 70
Other/IT 40
Note: Please see "Factors For Forward Looking Information" in merger
proxy, and please see other SEC documents previously filed by
Aetna and U.S. Healthcare
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
Patient Management
o Clinical Information Systems
o Expanded Information Systems
o Utilization Rationalization
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
Contracting
o Excess Provider Capacity
o Expanded Full Risk Contracts
o Provider Payment Levels
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
Aetna's Committed to Quality
o 11 of our HMOs have achieved full NCQA accreditation status
o 3 of our HMOs have achieved one-year accreditation status
o USQA assures high quality cost effective care
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
$140 Million of SG&A Synergies
1998
Medicare 50
National/Commerc 30
Cross Sell 20
Medical 60
Overlap Markets 30
Sales & Back Offic 70
Other/IT 40
Note: Please see "Factors For Forward Looking Information" in merger
proxy, and please see other SEC documents previously filed by
Aetna and U.S. Healthcare
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
SG&A Savings
Combined SG&A Expenses $ 2.2 Billion
Benchmark Range 10 - 20 %
Potential After Tax Savings $ 143 - 286 million
Aetna Projected After Tax SG&A Savings $ 140 million
Note: Please see "Factors For Forward Looking Information" in merger
proxy, and please see other SEC documents previously filed by
Aetna and U.S. Healthcare
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
Sales and Back Office -- Consolidating Aetna Operations Centers
Graphic chart of the United States and the Commonwealth of Puerto Rico broken
down in to 8 sections listing Operations Centers
AK1 LA1 CT1
WA1 WI1 PA4
OR1 MI7 DE2
CA4 IL3 VA1
ND1 IN7 NC1
MN2 OH3 GA2
KS1 KY1 FL1
OK1 TN2 MA1
TX4 NY1 PR1
Aetna (41) and USHC (3) Service Centers -- 8 to 13
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
Overlap Markets and Other/IT
Overlap Markets Other/IT
o Offices o IT Development
o Finance/Administration o IT Operations/System
o Sales Consolidations
o Network Management o Headquarter
o Medical Management Redundancies
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
Healthcare Application Transition Plan
Business Current # of Future # of
Application Platforms Platforms
- --------------------------- -------------- --------------
Marketing/Sales 15 8
Pricing 10 2
Employer Services 32 3
Member Services 21 3
Provider Services 34 10
Health Management 7 3
Provider Payments 11 2
Specialty Health 10 8
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
Aetna should Create Significant Cash Flow from Operations
$ Millions
1995 Combined Operating Earnings $855
Revenue Enhancements and
Expense Opportunities 300
Additional Interest Expense (65)
Adjusted Operating Earnings 1,090
Mandatorily Convertible Preferred Stock (55)
Dividends (10-20% Payout) (120)-(125)
Pro-Forma Cash Flow from Operations $910 -$915
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO
COMPANY LOGO
