Aetna to Select New CEO to Oversee Healthcare Division
NEW YORK — Aetna Inc. said Thursday that it plans to hire a new executive to head its health insurance business, which is being split off as an independent company.
Michael J. Cardillo, who is currently the top executive at Aetna’s U.S. Healthcare division, will report to the new chief executive, the company said.
Aetna said in a statement that “it is engaged in a comprehensive process to improve shareholder value and the quality of service to customers.â€
The Hartford, Conn.-based company plans to hire the new executive as soon as possible and well before the new company becomes independent.
Aetna bought U.S. Healthcare in 1996, but the division has suffered from rising health costs and poor relations with doctors, helping drag down the parent company’s profit and stock price.
Cardillo was one of several executives who worked for U.S. Healthcare before the Aetna purchase.
Aetna said it will finish the restructuring by the end of the year.
The split-up of the health insurance and financial services divisions was announced following February’s resignation of former Chief Executive Richard Huber, who had been unable to stem the slide in the company’s share price.
The company revealed its plans after it rejected a $70-a-share takeover bid from WellPoint Health Networks Inc., a Thousand Oaks-based managed-care company, and ING Group, a Dutch investment bank and insurer. WellPoint wanted Aetna U.S. Healthcare, and ING was interested in Aetna’s financial services.
That rejection rankled many investors because the $70 represented a huge premium. Aetna’s shares were selling for less than $40 at the time, the same value they were in 1992.
Aetna said the takeover bid was too low, and it had doubts that the smaller WellPoint would be able to integrate Aetna’s larger health business.
On Thursday, a group of institutional investors who own at least 25% of Aetna, said they supported rejecting the takeover, but said they want Aetna to “take decisive steps to deliver value in the marketplace.â€
The group, led by Herbert Denton of investment bank Providence Capital, said Aetna officials should figure out the specifics.
But he said the company needs to look at selling parts or all of the company, or implement a huge share buyback effort to increase the stock price.
About two dozen institutional investors were represented at the meeting.
On Thursday, shares of Aetna fell 19 cents to close at $56.75 on the New York Stock Exchange.
Denton said the company needs to act in the next 90 days to increase the company’s stock price.
The investors are encouraged that Aetna’s new chief executive, William H. Donaldson, is willing to consider fair offers for Aetna’s businesses, Denton said.
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