Aetna to Sell Financial Services and International Businesses to ING for $7.7 Billion

Business Wire, July 20, 2000

Business Editors

HARTFORD, Conn.--(BUSINESS WIRE)

Shareholders to Receive One Share of New Health Company and

Approximately $35 Per Share in Cash

July 20, 2000--Aetna (NYSE: AET) today announced that it has reached a definitive agreement to sell its financial services and international businesses to ING Group in a transaction valued at approximately $7.7 billion, consisting of approximately $5 billion in cash and the assumption of approximately $2.7 billion in debt.

Under the terms of the agreement, Aetna will spin off to its shareholders a new health business, which will include Aetna U.S. Healthcare, Group Insurance and Large Case Pensions, as well as Aetna Global Benefits. Simultaneously, the parent company and its remaining subsidiaries, which will house the financial services and international businesses, will merge with a newly formed subsidiary of ING. In exchange for each Aetna share, Aetna shareholders will receive one share in the new health company, which will be named Aetna Inc., and approximately $35 per share in cash.

The structure is expected to result in minimal tax to Aetna, maximizing the amount of cash shareholders receive. Depending on their cost basis, shareholders will be subject to capital gains taxes on the cash distribution, plus the value of the health company shares received in the transaction.

The transaction, which is subject to regulatory and shareholder approvals and other closing conditions, is expected to close by the end of 2000. The new health company will be headquartered in Hartford, Conn., with major facilities in Blue Bell, Pa., and Middletown, Conn.

"With this transaction, we believe we have taken an important step toward our stated goal of delivering value to shareholders, while also taking into account the concerns of our customers, employees and other constituents," Aetna Chairman and CEO William H. Donaldson said. "Under ING's ownership, the financial services and international businesses will be part of a strong global company with a significant commitment to continued future growth. Further, our customers will benefit from ING's financial strength, broad product array and international experience.

"We also are pleased with ING's stated commitment to the city of Hartford and the local communities where we do business. ING's intention to draw upon the many talented people in our financial services and international businesses has positive implications for current and future job opportunities in the Greater Hartford community.

"Finally, Aetna shareholders will retain ownership of the new health company, which we believe represents a turnaround opportunity as we take steps to improve financial performance and redefine the company's business model," Donaldson said.

The New Aetna

Following the close of the transaction with ING, Aetna will remain the nation's largest health care benefits company, with 19.5 million health members, 14.8 million dental members and 11.5 million group life insurance members. The company offers a full spectrum of health benefits and group insurance products. Other competitive strengths include: broad geographic reach, strong market positions, a large membership base, extensive provider networks, information technology expertise and a dedicated corps of employees who are recognized experts in their fields.

"Despite significant challenges, our health business is profitable, with strong cash flows," Donaldson said. "As a separate company, it should be able to bring intensified management focus on improved service to our customers and enhanced financial performance.

"With the previously announced higher-than-anticipated rise in medical costs for the second quarter, we have an even stronger sense of urgency to make the changes necessary to get our health business on the right track.

"Following a comprehensive review of our business model, we are implementing a number of strategic initiatives to improve the performance of our health business," Donaldson said. "These steps are focused on both the immediate need to improve financial performance and the imperative to transform our business model to offer more flexibility and choice."

The strategic initiatives include:

-- Restructuring our product portfolio to provide greater balance in our range of offerings, including the introduction of new products for January 2001 that focus on meeting consumer desires for greater personalization, flexibility and choice, and which are priced accordingly;

-- Improving relations with doctors and hospitals by eliminating unnecessary requirements and streamlining processes to eliminate hassles, while negotiating sensible contracts that meet the needs of all parties;

-- Leveraging Aetna's vast health care information technology assets to meet constituents' demand and achieve efficiencies;

--Providing increased flexibility to regional management to address issues that arise locally, where care is delivered;

-- Being selective about which markets to compete in for each of our products, with an eye toward achieving profitable businesses everywhere we compete;