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Aetna Is Target of a Proxy Challenge

March 09, 2002|From Bloomberg News

HARTFORD, Conn. — Aetna Inc., which lost $279.6 million last year, said investor Herbert Denton was mounting a proxy challenge after helping oust a previous chief executive at the second-biggest U.S. health insurer.

Providence Investors, led by Denton, has nominated a slate of candidates for three board seats, according to a filing Aetna made with the Securities and Exchange Commission. Providence owns 1,000 shares of Aetna stock, the filing said.

Denton, president of Providence Capital Inc., said Aetna's board was wrong to hire CEO John Rowe, a physician who had never run a public company. Denton criticized the board for rejecting a $10-billion takeover offer two years ago and accused it of ignoring investors.

Criticism by Denton and other investors forced the February 2000 resignation of CEO Richard Huber.

Aetna, once the biggest U.S. health insurer, last month reported its fourth consecutive quarterly loss and a loss for the year as the company battled rising medical costs and had expenses for cutting 6,000 jobs, or 16% of its work force.

Rowe ran Mount Sinai NYU Health System, which had $1.8 billion in revenue and 31,000 employees, before joining Aetna in September 2000. Hired to turn the company around, Rowe has dropped almost 4 million customers by focusing on profitable accounts and raised premiums to stem losses. He's promised investors a profit this year.

Aetna defended the board and urged shareholders to back its nominees at the April 26 annual meeting.

Shares of the Hartford, Conn.-based company rose 50 cents to $37.24 on the New York Stock Exchange.

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