Aetna to Trim 2,600 Jobs in Reorganization

Aetna Life and Casualty Co. Friday reported a 51% fall in its third-quarter earnings and said it will cut 2,600 of its 45,500 jobs in a reorganization costing $60 million.

The Hartford-based insurance company said it will disband its three domestic insurance divisions and form new divisions, which will be put in place in March.

After deducting for the reorganization, Aetna earned $88.6 million, or 80 cents a share, in the third quarter.

In last year’s period, it earned $182.6 million, or $1.63 per share, including a gain of $27.2 million on the sale of Federated Investors Inc. and a $15-million tax credit.

Revenue in the period was $4.84 billion, off slightly from $4.90 billion in the 1989 quarter.

Revenue was hit by a $57.8-million capital loss, against a $166-million gain last year.

Industry analysts said they were concerned about Aetna’s mortgage portfolio and the profitability of its property and casualty divisions.

“While the numbers are better than expected, I still want to know more about their mortgage portfolio,” said Herbert Goodfriend, first vice president, Prudential-Bache.

Joyce Culbert, analyst with the Firemark Group, said, “The issue of Aetna’s mortgage portfolio was not addressed.”

Aetna said its pretax net additions to reserves for mortgage loans and real estate writedowns totaled $58 million in the third quarter.

“The real issue, though, is whether there are more mortgage problems developing,” said Tom Sargent, Conning & Co.