2008-09-09 23:57:02 -

- Fitch Ratings has affirmed its ratings on Aetna Inc. (Aetna) and many of its wholly owned operating subsidiaries. Fitch has also assigned Aetna's prospective issue of senior unsecured notes an expected rating of 'A-'. The expected rating on the bonds is in line with Aetna's senior unsecured rating. Aetna's long-term Issuer Default Rating (IDR) is 'A'. The Rating Outlook is Stable.

This expected rating is contingent upon receipt of final documents conforming to information already received. Proceeds of the prospective issuance of notes will be used to repay outstanding commercial paper borrowings.

Today's rating action reflects the company's continued strong operating performance and solid balance sheet quality. In 2008 the overall health sector has encountered challenging operating

conditions that have negatively impacted earnings and cash flow. However, Fitch recognizes that Aetna's operating performance has remained steady and strong, thus outperforming most peers. Financial leverage has modestly increased, but remains within management's target and Fitch's rating expectations. Overall, the operating subsidiaries remain well capitalized and maintain good dividend capacity.

Fitch believes the company's biggest challenge will be to sustain its recent market leading operating performance. In the coming few years, Fitch anticipates that Aetna will continue to have solid operating margins and membership growth, though earnings performance, which has been better than most of its peers in recent periods, is anticipated to moderate towards industry trends.

Overall, earnings are expected to show moderate growth for 2008 relative to the prior year. The improvement will be driven by a combination of further improvement in the company's general and administrative expense ratio and membership growth. Given its business mix and disciplined underwriting, Aetna is positioned to maintain strong operating margins, though a modest reduction is anticipated.

Balance sheet quality is expected to remain strong, including a debt-to-total capital ratio of 30% and sustained operating company capitalization. Cash flow quality, both on a GAAP basis and dividend capabilities from the insurance subsidiaries, is expected to remain very strong, as has been reported in recent years. Debt-to-total operating EBITDA levels and statutory interest coverage are anticipated to remain near or below 1.3 times (x) and over 5x, respectively.

Fitch affirms the following ratings with a Stable Rating Outlook:

Aetna Inc.

--Long-term Issuer Default Rating (IDR) at 'A';

--Short-term IDR at 'F1';

--7.875% senior notes due 2011 at 'A-';

--5.75% senior notes due 2011 at 'A-';

--6% senior notes due 2016 at 'A-';

--6.625% senior notes due 2036 at 'A-';

--6.75% senior notes due 2037 at 'A-'

--Commercial paper at 'F1'.

Aetna Life Insurance Company

--Insurer financial strength (IFS) at 'AA-'.

Aetna Health Inc. Maryland

Aetna Health Inc. New Jersey

Aetna Health Inc. Pennsylvania

Aetna Health Inc. Texas

Aetna Health Inc. Florida

Aetna Health Inc. New York

--IFS at 'A+'.

Aetna Health Inc. Arizona

Aetna Health Inc. Colorado

Aetna Health Inc. Connecticut

Aetna Health Inc. Delaware

Aetna Health Inc. Georgia

Aetna Health Inc. Maine

Aetna Health Inc. Massachusetts

Aetna Health Inc. Michigan

Aetna Health Inc. Missouri

Aetna Health Inc. Ohio

Aetna Health Inc. Oklahoma

Aetna Health Inc. Tennessee

Aetna Health Inc. Washington

Aetna Health of California Inc.

Aetna Health of Illinois Inc.

Aetna Health of the Carolinas Inc.

--IFS at 'A'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

Fitch Ratings, Chicago
Peter F. Patrino, CFA, +1-312-368-3266
Bradley S. Ellis, CFA, +1-312-368-2089
Media Relations, New York
Cindy Stoller, +1-212-908-0526