Aetna’s Stock Sinks to 52-Week Low on Worries About Prudential Unit

HARTFORD, Conn. — Shares of Aetna Inc., the largest U.S. health insurer, fell 8% to a 52-week low after the company told investors that losses are accelerating at its newly purchased Prudential HealthCare unit.

Aetna purchased the unit for $1 billion in August from Prudential Insurance Co. of America, which will pick up most of the losses through 2000. The unit lost $50 million in the first nine months of 1998 and is now losing $200 million a year, analysts said. That makes it doubtful Aetna can turn the unit around before reimbursements from Prudential stop, they said.

“It’s worse now than it was in 1998,” said Charles Boorady, an analyst at Goldman, Sachs & Co. in New York who reduced his rating to “market outperform” from “recommend list” on Aetna. “The results have deteriorated, and they said they didn’t know why.”

Aetna’s inability to explain the downturn alarmed investors. When the purchase was announced in December, the company said it would add to earnings this year.

On the New York Stock Exchange, shares of Hartford-based Aetna fell $5.19 to close at $61.75 on volume more than six times its three-month average. The shares have fallen 12% since the company met with analysts Monday.