Aetna Names New CEO

Aetna Names New CEO

After helping engineer a recovery that more than quintupled Aetna Inc.’s stock price, Ronald A. Williams, 56, has been named its chief executive officer effective Feb. 14. Williams, who joined the company in 2001, replaces John W. Rowe, 61, who will serve as executive chairman until his retirement at the end of the year.

Analysts credit Williams with executing Rowe’s vision for Aetna, one of the nation’s leading providers of health insurance and employee benefit products. The strategy included investing heavily in technology to increase efficiency, reducing its workforce, raising premiums, and dropping unprofitable accounts. The result went straight to the bottom line: Aetna reported net income of $1.63 billion in 2005, compared with a net loss of $2.5 billion in 2002.

After such an impressive turnaround and run in its stock, from the time Williams became president until he took over as CEO, Wall Street will be watching closely. Aetna currently has 9% of commercial medical health plan enrollments in the U.S., behind United Health Group Inc. has (19%) and WellPoint Inc. (14%). Analysts say some investors would like to see a big acquisition. Williams will say only that he plans to continue to build upon the company’s current strategy.

That strategy has a number of legs. Under Williams’ leadership, Aetna has positioned itself to take advantage of an industry move toward more consumer-directed healthcare with its Aetna HealthFund health savings account and a service that provides information about physicians’ backgrounds. “Consumers are going to have to participate more in the cost of healthcare. As a result, you will want to know how to get the most value for your dollar,” Williams says.

Aetna also has opportunities to cross-sell medical, dental, behavioral, and group insurance products and pharmacy benefit plans to existing clients who might use only one or two of its services and to sell multiple product lines to new clients.