OVERVIEW

We are one of the nation's leading diversified health care benefits companies, serving approximately 37.2 million people with information and resources to help them make better informed decisions about their health care. We offer a broad range of traditional and consumer-directed health insurance products and related services, including medical, pharmacy, dental, behavioral health, group life and disability plans, and medical management capabilities and health care management services for Medicaid plans. Our customers include employer groups, individuals, college students, part-time and hourly workers, health plans, governmental units, government-sponsored plans, labor groups and expatriates. Our operations are conducted in three business segments: Health Care, Group Insurance and Large Case Pensions.

The following MD&A provides a review of our financial condition at March 31, 2009 and December 31, 2008 and results of operations for the three months ended March 31, 2009 and 2008. This Overview should be read in conjunction with the entire MD&A, which contains detailed information that is important to understanding our results of operations and financial condition, the consolidated financial statements and other data presented herein, as well as the MD&A contained in our 2008 Annual Report on Form 10-K (the "2008 Annual Report"). This Overview is qualified in its entirety by the full MD&A.

Summarized Results for the Three Months Ended March 31, 2009 and 2008:

(Millions)                                      2009          2008
Revenue:
 Health Care                               $ 7,946.5     $ 7,116.0
 Group Insurance                               531.2         482.9
 Large Case Pensions                           137.0         139.8
Total revenue                                8,614.7       7,738.7
Net income                                     437.8         431.6
Business Segment operating earnings: (1)
 Health Care                                   469.4         438.6
 Group Insurance                                42.1          34.2
 Large Case Pensions                             9.2           8.3
Cash flows from operations                     826.3         897.6

(1) Our discussion of operating results for our reportable business segments is based on operating earnings, which is a non-GAAP measure of net income (the term "GAAP" refers to U.S. generally accepted accounting principles). Refer to Segment Results and Use of Non-GAAP Measures in this MD&A on page 21 for a discussion of non-GAAP measures. Refer to pages 21, 24 and 25 for a reconciliation of operating earnings to net income for Health Care, Group Insurance and Large Case Pensions, respectively.

Our business segment operating earnings for the three months ended March 31, 2009, compared to the corresponding period in 2008, reflect continued growth in our Health Care business. The changes in our net income primarily reflect growth in revenue from increases in membership levels and premium rate increases for renewing membership in 2009 which was largely offset by higher pension plan and other postretirement benefit plan ("OPEB") expenses due to 2008 investment losses experienced by the assets supporting our pension obligations. We experienced membership growth in both our administrative services contract ("ASC") (where the plan sponsor assumes all or a majority of the risk for medical and dental care costs) and Insured (where we assume all or a majority of the risk for medical and dental care costs) products. At March 31, 2009, we served approximately 19.1 million medical members (consisting of approximately 33% Insured members and 67% ASC members), 14.5 million dental members and 11.2 million pharmacy members.

We continued to generate strong cash flows from operations in the first quarter of 2009. These cash flows funded ordinary course operating activities. We also continued our share repurchase program during the first quarter of 2009, repurchasing approximately 10 million shares of our common stock at a cost of approximately $277 million.

Executive Management Update
Gery J. Barry, Chief Strategy Officer, will be leaving Aetna to pursue other interests. The strategic planning function will report to Joseph M. Zubretsky, Executive Vice President and Chief Financial Officer.

Segment Results and Use of Non-GAAP Measures in this Document The discussion of our results of operations that follows is presented based on our reportable segments in accordance with Statement of Financial Accounting Standards ("FAS") No. 131, "Disclosures about Segments of an Enterprise and Related Information," and is consistent with our segment disclosure included in Note 13 of Condensed Notes to Consolidated Financial Statements on page 16. Each segment's discussion of results is based on operating earnings, which is the measure reported to our Chief Executive Officer for purposes of assessing the segment's financial performance and making operating decisions, such as allocating resources to the segment. Our operations are conducted in three business segments: Health Care, Group Insurance and Large Case Pensions. Our Corporate Financing segment is not a business segment. It is added to our business segments to reconcile to our consolidated results. The Corporate Financing segment includes interest expense on our outstanding debt and, beginning in 2009, the financing components of our pension plan and OPEB plan expense (the service cost component of this expense is allocated to our business segments). Prior periods have been reclassified to reflect this change.

Our discussion of the results of operations of each business segment is based on operating earnings, which exclude realized capital gains and losses as well as other items, if any, from net income reported in accordance with GAAP. We believe excluding realized capital gains and losses from net income to arrive at operating earnings provides more useful information about our underlying business performance. Net realized capital gains and losses arise from various types of transactions, primarily in the course of managing a portfolio of assets that support the payment of liabilities; however these transactions do not directly relate to the underwriting or servicing of products for our customers and are not directly related to the core performance of our business operations. We also may exclude other items that do not relate to the ordinary course of our business from net income to arrive at operating earnings. In each segment discussion below, we present a table that reconciles operating earnings to net income reported in accordance with GAAP. Each table details the net realized capital gains and losses and any other items excluded from net income, and the footnotes to each table describe the nature of each other item and why we believe it is appropriate to exclude that item from net income.

HEALTH CARE

Health Care consists of medical, pharmacy benefits management, dental and vision plans offered on both an Insured basis and an ASC basis. Medical products include point-of-service ("POS"), preferred provider organization ("PPO"), health maintenance organization ("HMO") and indemnity benefit plans. Medical products also include health savings accounts ("HSAs") and Aetna HealthFundŽ, consumer-directed health plans that combine traditional POS or PPO and/or dental coverage, subject to a deductible, with an accumulating benefit account. We also offer Medicare and Medicaid products and services and specialty products, such as medical management and data analytics services, behavioral health plans and stop loss insurance, as well as products that provide access to our provider network in select markets.

Operating Summary for the Three Months Ended March 31, 2009 and 2008:



(Millions)                                              2009          2008
Premiums:
 Commercial                                        $ 5,322.0     $ 4,883.4
 Medicare                                            1,461.1       1,227.5
 Medicaid                                              209.1         142.6
Total premiums                                       6,992.2       6,253.5
Fees and other revenue                                 862.4         797.0
Net investment income                                   97.7          87.0
Net realized capital losses                             (5.8 )       (21.5 )
  Total revenue                                      7,946.5       7,116.0
Health care costs                                    5,804.2       5,086.2
Operating expenses:
 Selling expenses                                      299.1         279.3
 General and administrative expenses                 1,101.7       1,066.1
Total operating expenses                             1,400.8       1,345.4
Amortization of other acquired intangible assets        22.8          26.1
  Total benefits and expenses                        7,227.8       6,457.7
Income before income taxes                             718.7         658.3
Income taxes                                           255.1         233.7
Net income                                         $   463.6     $   424.6

The table presented below reconciles operating earnings to net income reported in accordance with GAAP for the three months ended March 31, 2009 and 2008:

(Millions)                       2009        2008
Net income                    $ 463.6     $ 424.6
Net realized capital losses       5.8        14.0
Operating earnings            $ 469.4     $ 438.6

Operating earnings for the first quarter of 2009 when compared to the corresponding period in 2008 reflect growth in premiums and fees and other revenue, higher net investment income, as well as continued operating expense efficiencies (total operating expenses divided by total revenue). The growth in premiums and fees and other revenue resulted from increases in membership levels from current and new customers as well as premium rate increases for renewing membership.

We calculate our medical benefit ratio ("MBR") by dividing health care costs by premiums. For the three months ended March 31, 2009 and 2008, our MBRs by product were as follows:

                                                                       2009       2008
                                                        Commercial     81.7 %     79.8 %
                                                        Medicare       86.8 %     86.0 %
                                                        Medicaid       90.7 %     92.8 %
                                                        Total          83.0 %     81.3 %

Refer to our discussion of Commercial and Medicare results that follows for an explanation of the changes in our MBR.

The operating results of our Commercial products continued to grow during the three months ended March 31, 2009
Commercial premiums increased approximately $439 million for the three months ended March 31, 2009, when compared to the corresponding period in 2008. This increase reflects premium rate increases on renewing business and an increase in membership levels (refer to Membership page 24).

Our Commercial MBR was 81.7% and 79.8% for the three months ended March 31, 2009 and 2008, respectively. For the three months ended March 31, 2009, we had approximately $38 million of unfavorable development of prior period health care cost estimates. This development was driven by what we believe is unusually high paid claims activity in the first quarter primarily related to the fourth quarter of 2008. We had no significant development of prior period health care cost estimates for the three months ended March 31, 2008. Taking this development into account, the Commercial MBR for the three months ended March 31, 2009 was higher than the corresponding period in 2008, reflecting a percentage increase in our per member health care costs that outpaced the percentage increase in per member premiums. The increase in per member health care costs was driven primarily by increased intensity of facility services across products (without attendant increases in key utilization metrics) and higher than expected impacts from layoffs and members' election of benefits under the Consolidated Omnibus Budget Reconciliation Act of 1986 ("COBRA"). Refer to Critical Accounting Estimates - Health Care Costs Payable in our 2008 Annual Report for a discussion of Health Care Costs Payable.

Medicare results for the first quarter 2009 reflect growth from the corresponding period in 2008
Medicare premiums increased approximately $234 million for the three months ended March 31, 2009, compared to the corresponding period in 2008. This increase primarily reflects growth in our group private-fee-for-service ("PFFS") Medicare Advantage plans, increases in supplemental premiums across all our Medicare Advantage products, rate increases from the Centers for Medicare & Medicaid Services ("CMS") and true-ups of premium estimates for specified risk adjustments from CMS.

The Medicare MBR for the first quarter of 2009 was 86.8%, compared to 86.0% for the corresponding period in 2008. For the three months ended March 31, 2009, we had a small amount of unfavorable development of prior period health care cost estimates due to a higher risk profile of the book of business that was largely offset by higher premium estimates for specified risk adjustments from CMS. We had no significant development of prior period Medicare health care cost estimates in the three months ended March 31, 2008. Taking this development into account, the Medicare MBR for the three months ended March 31, 2009 was slightly higher than the corresponding period in 2008, reflecting a percentage increase in per member health care costs that slightly outpaced the percentage increase in per member premiums.

Other Sources of Revenue
Fees and other revenue increased approximately $65 million for the three months ended March 31, 2009, compared to the corresponding period in 2008, reflecting growth in ASC membership.

Membership
Health Care's membership at March 31, 2009 and 2008 was as follows:

                                         2009                                       2008
(Thousands)                Insured           ASC         Total        Insured           ASC         Total
Medical:
 Commercial                  5,656        12,060        17,716          5,387        10,901        16,288
 Medicare                      419             -           419            350            14           364
 Medicaid                      284           647           931            174           641           815
Total Medical
Membership                   6,359        12,707        19,066          5,911        11,556        17,467

Consumer-Directed
Health Plans (1)                                         1,795                                      1,359

Dental:
 Commercial                  5,214         7,640        12,854          5,008         7,584        12,592
 Medicare and
Medicaid                       245           381           626            216           394           610
 Network Access (2)              -         1,056         1,056              -           964           964
Total Dental
Membership                   5,459         9,077        14,536          5,224         8,942        14,166

Pharmacy:
 Commercial                                              9,997                                      9,746
 Medicare PDP
(stand-alone)                                              322                                        369
 Medicare Advantage
PDP                                                        223                                        181
 Medicaid                                                   26                                         22
 Total Pharmacy
Benefit Management
Services                                                10,568                                     10,318
 Mail Order (3)                                            672                                        633
Total Pharmacy
Membership                                              11,240                                     10,951

(1) Represents members in consumer-directed health plans also included in Commercial medical membership above.
(2) Represents members in products that allow these members access to our dental provider network for a nominal fee.
(3) Represents members who purchased medications through our mail order pharmacy operations during the first quarter of 2009 and 2008, respectively, and are included in pharmacy membership above.

Total medical, dental and pharmacy membership at March 31, 2009 increased compared to March 31, 2008. The increase in medical membership was primarily due to growth in Commercial membership, driven by growth within existing plan sponsors and new customers, net of lapses and Medicaid membership, attributable to a new insured contract.

Total dental membership increased in 2009 primarily due to membership growth from both new and current customers.

Pharmacy membership increased in 2009 primarily due to growth in our pharmacy benefit management services and mail order operations. Our pharmacy benefit management services growth was due in part to an increase in Commercial pharmacy membership. Commercial pharmacy membership increased reflecting strong cross selling success. Mail order operations reflected an increase in member utilization during this time period.

GROUP INSURANCE

Group Insurance primarily includes group life insurance products offered on an Insured basis, including basic and supplemental group term life insurance, group universal life, supplemental or voluntary programs and accidental death and dismemberment coverage. Group Insurance also includes (i) group disability products offered to employers on both an Insured and an ASC basis, which consist primarily of short-term and long-term disability insurance, (ii) absence management services offered to employers, which include short-term and long-term disability administration and leave management, and (iii) long-term care products that were offered primarily on an Insured basis, which provide benefits covering the cost of care in private home settings, adult day care, assisted living or nursing facilities. We no longer solicit or accept new long-term care customers, and we are working with our customers on an orderly transition of this product to other carriers.

Operating Summary for the Three Months Ended March 31, 2009 and 2008:



(Millions)                                            2009        2008
Premiums:
 Life                                              $ 276.8     $ 269.2
 Disability                                          140.4       132.0
 Long-term care                                       18.2        22.1
Total premiums                                       435.4       423.3
Fees and other revenue                                27.7        25.2
Net investment income                                 64.1        64.0
Net realized capital gains (losses)                    4.0       (29.6 )
  Total revenue                                      531.2       482.9
Current and future benefits                          375.6       375.9
Operating expenses:
 Selling expenses                                     23.4        24.5
 General and administrative expenses                  68.4        63.8
Total operating expenses                              91.8        88.3
Amortization of other acquired intangible assets       1.7         1.7
  Total benefits and expenses                        469.1       465.9
Income before income taxes                            62.1        17.0
Income taxes                                          16.0         2.0
Net income                                         $  46.1     $  15.0

The table presented below reconciles operating earnings to net income reported in accordance with GAAP for the three months ended March 31, 2009 and 2008:

(Millions)                              2009       2008
Net income                            $ 46.1     $ 15.0
Net realized capital (gains) losses     (4.0 )     19.2
Operating earnings                    $ 42.1     $ 34.2

Operating earnings for the three months ended March 31, 2009 increased compared to the corresponding period in 2008 reflecting a higher underwriting margin (premiums less current and future benefits) in our life products, partially offset by lower underwriting margins in our disability products.

The group benefit ratio was 86.3% for the three months ended March 31, 2009, compared to 88.8% for the corresponding period in 2008. The decrease in the group benefit ratio for the three months ended March 31, 2009 compared to the corresponding period in 2008 was primarily due to favorable life experience partially offset by unfavorable disability experience.

LARGE CASE PENSIONS

Large Case Pensions manages a variety of retirement products (including pension and annuity products) primarily for tax qualified pension plans. These products provide a variety of funding and benefit payment distribution options and other services. The Large Case Pensions segment includes certain discontinued products.

Operating Summary for the Three Months Ended March 31, 2009 and 2008:

(Millions)                               2009        2008
Premiums                              $  49.7     $  51.9
Net investment income                    87.4        92.2
Other revenue                             2.9         3.1
Net realized capital losses              (3.0 )      (7.4 )
  Total revenue                         137.0       139.8
Current and future benefits             127.7       133.0
General and administrative expenses        .9         4.0
  Total benefits and expenses           128.6       137.0
Income before income taxes                8.4         2.8
Income taxes (benefits)                   2.2         (.7 )
Net income                            $   6.2     $   3.5

The table presented below reconciles operating earnings to net income reported in accordance with GAAP:

(Millions)                     2009      2008
Net income                    $ 6.2     $ 3.5
Net realized capital losses     3.0       4.8
Operating earnings            $ 9.2     $ 8.3

Discontinued Products in Large Case Pensions Prior to 1993, we sold single-premium annuities ("SPAs") and guaranteed investment contracts ("GICs"), primarily to employer sponsored pension plans. In 1993, we discontinued selling these products, and now we refer to these products as discontinued products.

We discontinued selling these products because they were generating losses for us and we projected that they would continue to generate future losses over their life (which is greater than 30 years), so we established a reserve for anticipated future losses at the time of discontinuance. We provide additional information on this reserve, including key assumptions and other important information, in Note 14 of Condensed Notes to Consolidated Financial Statements beginning on page 17. Please refer to this note for additional information.

The operating summary for Large Case Pensions above includes revenues and expenses related to our discontinued products with the exception of net realized capital gains and losses which are recorded as part of current and future benefits. Since we established a reserve for future losses on discontinued products, as long as our expected future losses remain consistent with prior projections, the operating results of our discontinued products are applied against the reserve and do not impact operating earnings or net income for Large Case Pensions. However, if actual or expected future losses are greater than we currently estimate, we may have to increase the reserve, which could adversely impact net income. If actual or expected future losses are less than we currently estimate, we may have to decrease the reserve, which could favorably impact net income. In those cases, we disclose such adjustment separately in the operating summary. Management reviews the adequacy of the discontinued products reserve quarterly. The current reserve reflects management's best estimate of anticipated future losses.

The activity in the reserve for anticipated future losses on discontinued products for the three months ended March 31, 2009 and 2008 (pretax) was as follows:

(Millions)                               2009          2008
Reserve, beginning of period          $ 790.4     $ 1,052.3
Operating losses                        (13.9 )        (9.2 )
Net realized capital (losses) gains      (9.4 )         2.0
Reserve, end of period                $ 767.1     $ 1,045.1

During the first quarter of 2009, our discontinued products reflected an operating loss and net realized capital losses, both attributable to the unfavorable investment conditions that existed from the latter half of 2008 through the first quarter of 2009. We have evaluated the operating losses in 2009 against our expectations of future cash flows assumed in estimating the reserve and do not believe an adjustment to the reserve is required at March 31, 2009.

Assets Managed by Large Case Pensions
At March 31, 2009 and 2008, Large Case Pensions assets under management consisted of the following:

(Millions)                                       2009           2008
Assets under management: (1)
  Fully guaranteed discontinued products   $  3,694.4     $  4,193.5
  Experience-rated                            4,239.8        4,374.7
  Non-guaranteed                              2,514.7        3,723.0
  Total assets under management            $ 10,448.9     $ 12,291.2

(1) Excludes net unrealized capital (losses) gains of $(266.7) million and $82.4 million at March 31, 2009 and 2008, respectively.

Assets supporting experience-rated products (where the contract holder, not us, assumes investment and other risks subject to, among other things, certain minimum guarantees) may be subject to contract holder or participant withdrawals. For the quarter ended March 31, 2009 and 2008, experience-rated contract holder and participant-directed withdrawals were as follows:

(Millions)                                                          2009          2008
Scheduled contract maturities and benefit payments (1)         $    66.8     $    85.0
Contract holder withdrawals other than scheduled contract
. . .