Aetna 2003 Annual Report Download - page 5

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3
Over the course of
12 months, we produced
outstanding results.
TO OUR SHAREHOLDERS:
2003 was another great year for the company, bringing
Aetna a major step closer to our goal of industry leadership.
In January 2003, we set out some ambitious objectives.
Entering the second half of the company’s turnaround, our
priorities were to further expand margins by continuing to
lower our medical cost trend and reduce administrative expenses,
while forging ahead with the implementation of our new
strategic plan. At the same time, we committed to enhancing
our health care quality initiatives and strengthening our
working relationships with doctors and hospitals.
It was a lot of ground to cover, but over the course of 12 months,
we produced outstanding results. Aetna employees proved once
again that they know how to deliver on our promises.
ACCOMPLISHING OUR FINANCIAL GOALS
In 2003, we made further significant progress on Aetna’s key
financial, operational and strategic goals. Last year, we reported
full-year operating earnings of $5.18 per share, more than
double the $2.50 per share reported in 2002, excluding favorable
reserve development, realized capital gains and losses and other
items. At year-end, Aetna’s pretax operating margin was
7.9 percent. At press time, our stock was trading at its highest
levels since becoming an independent health care company
in December 2000.
We achieved these results by managing medical costs
effectively — Aetna’s commercial risk medical cost increases
slowed to 8 percent in 2003, one of the lowest rates in the
managed care industry. In addition, we became more cost-
effective as an organization, reducing expenses by $194 million,
while continuing to improve customer satisfaction levels.
We also ended our long decline in membership that began in
2001 and steadied our membership at approximately 13 million.
While we experienced some membership reductions in existing
accounts due to the economy — as did other insurers — which
Bringing Forth
A Stronger, New Aetna