Aetna CEO to retire; Bertolini named replacement

AP News
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Posted: Oct 20, 2010 1:02 PM
Aetna CEO to retire; Bertolini named replacement

Aetna Chairman and CEO Ronald A. Williams plans to retire next spring, and company President Mark T. Bertolini will replace him in a widely expected leadership change for the health insurer.

The Hartford, Conn., managed care company said Wednesday that Bertolini, 54, will become CEO and be named to its board effective Nov. 29. Williams, 60, will become executive chairman and then retire in April.

Aetna's board plans to elect Bertolini chairman after Williams retires.

Bertolini was seen as the heir apparent to Williams, said Ana Gupte, an analyst at Sanford Bernstein.

"There was buzz around about (Williams) getting ready to retire," she said.

Aetna Inc. is the third-largest publicly traded managed care company, trailing UnitedHealth Group Inc. and WellPoint Inc. Its medical enrollment totaled 18.6 million people at the end of June.

Health insurance is its main product, but the insurer also sells dental, group life and disability coverage.

Morgan Stanley analyst Doug R. Simpson said in a research note investors are "fairly well-acquainted" with Bertolini, and most expected the move. But he also noted that managed care leadership changes can trigger subsequent changes in a company's executive ranks, as new CEOs build their teams.

"This should prove manageable but bears watching given the timing right in front of health reform implementation," he said.

Insurers are working to shape the health care reform law passed earlier this year by Congress that aims to cover millions of uninsured people.

Williams has been vocal in the reform debate. He wrote or co-wrote opinion pieces in several newspapers, including The Wall Street Journal, and has pushed for the provision that individuals be required to buy coverage.

Health insurers also have been dealing with slumping enrollment, as employers cut jobs and reduce the number of people covered by their plans.

Last year, Aetna struggled with costs that rose faster than it expected when it set prices. That caused it to reprice a big portion of its commercial insurance.

But the company rebounded in the first two quarters of 2010, with profit increases of 29 percent and 42 percent, respectively. It earned $491 million, or $1.14 per share, on $8.54 billion in revenue in the second quarter. Aetna releases third-quarter results Nov. 3.

Gupte said Bertolini is "very capable" of doing the job. "This is a time of intense change for the health insurance industry, and he has an enormous amount of experience," she said.

Bertolini joined the company in 2003 and was named president in 2007. Before Aetna, the Michigan native served as a senior vice president with Aetna competitor Cigna Corp. and as CEO of SelectCare Inc., a Detroit-area managed care company.

He holds a master of business administration in finance degree from Cornell University.

Williams joined Aetna in 2001 and has served as chairman and CEO since 2006. He will work as a company consultant until February 2012.

Aetna shares rose 55 cents, or 1.8 percent, to $31.45 in midday trading.