Aetna Sees $65 Million in Costs for Job Cuts, Sales (Update1)

c.2009 Bloomberg News

(Adds expected size of workforce in fourth paragraph.)

Dec. 30 (Bloomberg) -- Aetna Inc., the third-biggest U.S. health insurer, will report fourth-quarter costs of $60 million to $65 million for previously announced job cuts and real estate consolidation.

Aetna said it will take a $40 million after-tax charge for eliminating 625 jobs and combining some of its field offices this quarter. The rest of the charge covers a "similarly sized" reduction in personnel in 2010's first quarter, the Hartford, Connecticut-based company said in a statement today. The cuts were first announced Nov. 18.

The company is cutting jobs and consolidating offices to deal with an expected drop in enrollment due to the recession, as well as the potential impact of health-care legislation being debated in Washington. Chief Financial Officer Joseph Zubretsky said in October that Aetna may lose 650,000 members next year and plans to raise premiums to cope with rising medical costs.

The cuts will reduce the insurer's workforce to about 34,300 employees by the end of the first quarter and don't involve exiting any markets, Aetna said today.

Aetna fell 37 cents, or 1.1 percent, to $32.49 at 9:53 a.m. in New York Stock Exchange composite trading. The shares had risen 15 percent for the year before today.

The insurer is expected to earn about $1.25 billion in net income this year after adjustments for one-time costs, according to 12 analysts surveyed by Bloomberg.

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