Los Angeles Times
Aetna Inc., the biggest U.S. health insurer, said Richard Huber on Friday resigned as chairman and chief executive amid shareholder pressure. The company’s shares have lost more than half their value since May.
Huber, 63, was replaced by William H. Donaldson, 68, a co-founder of Donaldson, Lufkin & Jenrette Inc., a former chief executive of the New York Stock Exchange and a member of Aetna‘s board since 1977.
Donaldson will head a company with three main businesses: U.S. health insurance, financial services, and insurance and financial planning outside the U.S. He also was named president on Friday during Aetna‘s scheduled board meeting.
Aetna said it revoked a company rule that mandated retirement for executives at 65.
“Mr. Donaldson does not view his job as interim,” said Joyce Oberdorf, an Aetna spokeswoman. “The board has asked him not to approach this job as a caretaker.”
Donaldson said Aetna has started an “urgent review” of its businesses and strategy.
Shares in Hartford, Conn.-based Aetna have fallen from a 52-week high of $ 99.88 on concerns that the company is inadequately integrating acquisitions and controlling medical costs. The shares rose 19 cents to close at $ 40.75 on the New York Stock Exchange, after being halted earlier in the day on the news.
Huber, who had said he didn’t think Aetna‘s share price accurately reflected the company’s value, resigned amid pressure from shareholders to do something to reverse the stock decline. Before the resignation, some shareholders said the company needed to consider spinning off or selling some major business lines, possibilities Aetna had previously considered.
Aetna also faced a review by the Securities and Exchange Commission of the accounting it used for acquisitions during the last three years. That time period included Aetna‘s $ 8.9-billion purchase of U.S. Healthcare Inc. in 1996, the $ 1.1-billion purchase of New York Life Insurance Co.’s health insurance unit in 1998 and last year’s $ 1-billion purchase of Prudential Insurance Co. of America’s managed-health unit.
In July, Aetna and Huber were sued for allegedly defaming an attorney who had just won a record $ 120.5-million verdict against the company’s California subsidiary.
“You had a skillful ambulance-chasing lawyer, a politically motivated judge and a weeping widow,” Huber was quoted as saying after the verdict.
Huber subsequently apologized for the remarks; in November, Aetna won dismissal of the defamation suit in court.
On Friday, Jamie Court, director of the Santa-Monica based Foundation For Taxpayer and Consumer Rights, who has been a major critic of Huber, said he was happy with the chairman’s dismissal. But Court said the advocacy group will miss him.
“Huber is the best weapon we had to bolster the case for patients’ rights,” Court said.