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Aetna, Inc. (NYSE:AET)

June 12, 2013 11:40 am ET

Executives

Mark T. Bertolini - Chairman, Chief Executive Officer, President, Chairman of Executive Committee and Member of Investment & Finance Committee

Analysts

Matthew Borsch - Goldman Sachs Group Inc., Research Division

Matthew Borsch - Goldman Sachs Group Inc., Research Division

Healthcare Research Conference. Great to see everybody. Good attendance. We are delighted to welcome back Aetna's CEO, Mark Bertolini. And actually, before we get started, let me first read a short disclosure and then there's one from Aetna as well. We're required to make certain disclosures and public appearances about Goldman Sachs' relationships with companies we discuss. The disclosures related to investment banking relationships, compensation received or 1% or more ownership. I'm prepared to read disclosure for any issuer now or at the end of the session, if anyone would like me to. However, these disclosures are available in our most recent reports available to U.S. clients on our firm portals, with updates to those disclosures available by ticker on the firm's public website, gs.com. In addition, disclosures applicable to research with respect to issuers, if any, mentioned herein are available through your investment representative. And as always, views of non-Goldman Sachs personnel may not represent the company views. Over to you.

Mark T. Bertolini

So I was able to work with our legal team to get it much shorter than that.

Matthew Borsch - Goldman Sachs Group Inc., Research Division

Congratulations.

Mark T. Bertolini

During this session, we will make forward-looking statements, including statements concerning our 2013 performance.Certain of the risk factors that may impact those statements and could cause actual future results to differ materially from currently projected results are described in Aetna's 2012 Form 10-K and first quarter 2013 10-Q and Coventry's first quarter 2013 10-Q. Reconciliations of non-GAAP measures are available on the Investor Information section of aetna.com.

Question-and-Answer Session

Matthew Borsch - Goldman Sachs Group Inc., Research Division

Great. Fantastic. All right, with that, let me launch right into it with a question, general question. You got a lot on your plate right now. There's a lot that's changing on various fronts, the exchanges, the Medicaid expansion, Medicare Advantage, Coventry acquisition, et cetera. How are you getting the company to focus on those things?

Mark T. Bertolini

So I think what we've done in our capital planning and our operating budget and our staffing levels is focus the organization on 3 things: hitting the 2013 plan; integrating Coventry effectively, and obviously, it won't be just be a one-year event; and getting ready for exchanges. Everything else is off the table. We're focused on those 3 things, that we deliver on those well. 12 months from now, all the other stuff we were thinking about will still be there for us to pursue. But I think that's the best use of our resources. And quite frankly, I have you lift in and of itself.

Matthew Borsch - Goldman Sachs Group Inc., Research Division

Okay. And let me ask on it, the third there, the implementation of exchanges. How are you thinking about your -- I think you've talked about '14, '15 public exchanges to participate in, whether your thinking has evolved at all there and if there's anything more you could tell us and then your thinking on the private exchange.

Mark T. Bertolini

So we have filed rates in 14 states for public exchanges. And that, as you know, initiates a conversation about what it is we will ultimately result with in September. And that -- those filings are based off of literally 2/3 of our networks complete. Where we have network insufficiency, we've put those network providers in at commercial rates for our pricing models so far. And as we continue to negotiate, we'll update that pricing as we move through the program. We have not, as everyone knows, participated in the state of California. Coventry has a different strategy around approaching public exchanges. We are evaluating that, and that will probably expand the number of markets we will be involved in. But they'll largely be secondary markets in an approach that we have yet to fully vet internally. But we'll come to those conclusions quickly here over the next month or so as to how many more states we'll participate in under the Coventry model.

Matthew Borsch - Goldman Sachs Group Inc., Research Division

And so do you mean that in some or many cases that we'd be talking about partial state participation?

Mark T. Bertolini

I think all of it is partial state participation. I don't think there's any state we're in for everything. And so I think it's -- and there may be a handful, 1 or 2 of them, but not many. I think it's really about markets in the states where we believe we can be competitive, and so I think all of it is just that.

Matthew Borsch - Goldman Sachs Group Inc., Research Division

Okay. Got it.

Mark T. Bertolini

So that's the public exchange marketplace. We believe it's an appropriate thing to invest in. The way we think about this is that Coventry gives us a whole different way of thinking about public exchanges. They come in with a completely different approach, so we can experiment. The way we're gating all of this is we're wrapping it into what could be the worst exposure based on current enrollment projections, which are in the single-digit millions. Now I think that recently the White House came out with their number, which I have known for some time, about $7 million. So if you think about that and the potential market share, we could get, what is our real exposure if things go badly? And what do we need to do to gate it? So I don't -- I'm viewing this is going to be bumpy to start with from a public exchange standpoint. But quite frankly, I don't think it's going to be as big a deal on the financials that the industry's people have anticipated earlier on.

Matthew Borsch - Goldman Sachs Group Inc., Research Division

So anything that -- on the public exchanges that we should be looking for as the federal government rules out rules and things we haven't seen yet? Obviously, we know a lot about California. We don't know as much about how exchanges are going to operate in Florida, in Texas, because the feds are running it and the rules haven't been unveiled yet.

Mark T. Bertolini

Well, when the initial application came out, I think the whole enrollment and verification process is going to be very important and its impact on the financials of this program. So when the original application, 21-page application, came out, I was personally involved in that conversation with the White House to say, "Are you kidding me?" And when they came back and said, "Look, it's 3 pages, which is a dramatic reduction in volume. So we save some trees, but the level of information required to verify to eligibility for low-income subsidy is still significant like your last tax return." And what the feeling is right now, at least as we see it, is that this is going to be a trust and verify enrollment and that the GAO will get involved sometime in the middle or later part of next year to validate this eligibility requirement. And the real question for us is, okay, let's say somebody lied on their application or had a change in status. Who does the government go back for, for those subsidies? Who do they go back to? And who's going to be obligated to pay them back? And those kinds of rules really matter because if they're coming back to us, then we got an issue.

Matthew Borsch - Goldman Sachs Group Inc., Research Division

Yes.

Mark T. Bertolini

All right, and could really undo the financials of the system. So I think those kinds of things and based on as we get closer to the actual event, the things that we will short-circuit or shortcut to get the thing up and running because it will be up and running October 1, 2013, those are the things that worry us about what are the ramifications of that coming back on the other end.

Matthew Borsch - Goldman Sachs Group Inc., Research Division

So is it trust and verify then? Has that been settled?

Mark T. Bertolini

That is where they're headed so far, and that will the thing that we will be most concerned about.

Matthew Borsch - Goldman Sachs Group Inc., Research Division

Okay. On the private exchanges, I think you've previously talked about that being an area where you think there's going to be a lot of innovation over the next couple of years. Maybe talk a little bit about how you think you're going to be driving that.

Mark T. Bertolini

I think, in the near term, private exchanges will move at a much more rapid pace from both size and innovation standpoint and the public exchanges. And I think in 3 years, they'll eclipse the public exchanges, and in 5 years, will be the normal course of business across the industry. So I think it is a big event. And the industry fought what we called association health plans for the last decade because we thought they would disrupt the B2C -- B2B business model, which it would. But now that we have public exchanges, these private exchanges, which really are association health plans in drag, are really now the rage. And this is going to be a bit like the move from brick-and-mortar travel agency, the online travel agency. There are going to be a lot of these things that are going to pop up. They're going to be in all different forms. They're going to be structured some just purely on group purchasing, an aggregation of eyeballs. And there are going to be others that are going to be deeper like the ones we'll develop that will actually focus on building capabilities that actually meet the needs of the population being served. And so I think this evolution is going to happen fast. There's going to be a lot of experiments, some won't survive. And you'll see consolidations and layering of exchanges over time, much like you've seen with KAYAK in the travel agency online business. So I think it's going to be robust. There's going to be a lot of opportunity. And I think it's going to move the market regardless of the employer's involvement in the purchasing of health care to a much more consumer-based marketplace. And this will be the way that employers will be able to test the viability of defined contribution in a notional way early and ultimately move into defined contribution over time, if there's a stable marketplace on which they can rely.

Matthew Borsch - Goldman Sachs Group Inc., Research Division

And then with the key feature of the private exchanges being they retain the employer tax subsidy in that structure.

Mark T. Bertolini

Well, I think it opens up the employer tax subsidy to -- it's easier to take that away in that model going forward. And so I could -- you could legitimately see that as a big shift.

Matthew Borsch - Goldman Sachs Group Inc., Research Division

Right, right. And of course, the Cadillac tax is already facing that out in some ways at the upper end.

Mark T. Bertolini

Right, right. So I think it opens up a lot of ways to get after the tax code into sort of shift the debate on how to fix the debt.

Matthew Borsch - Goldman Sachs Group Inc., Research Division

Do you -- are the major carriers -- or the regional carriers, is there -- I'm sure there is not equal embracing of the notion of private exchanges is there. Are there some who are -- you see actively resisting? Or...

Mark T. Bertolini

I think there -- we have certain requirements to participate in a private exchange, which we have been able to get so far. So therefore, we believe it's appropriate to give them a try and to be involved because it's going to, again, be -- it's going to be a bit like a lab experiment. And there's going fairly enough of them and they won't be big enough to matter, but it will be important to participate and try out new techniques. We will develop our own. We already have some already up. We have the pipes laid. We're now working on building verticals around industries, focused on true population management on those types of employees, so a very different kind of private exchange, not just an aggregation, but really more focused on population management and specific populations of people across -- within industries. And so we see these as opportunities to try a number of things. We think we're early enough in with all of this to be able to play in enough different places to see how they evolve. The real value in these exchanges will be the sustainable affordability of the exchange over time because that what's allows the employer to move from a notional-defined contribution, here's a budget I'm going to put forward for health care, to actual defined contribution where they actually give the employees the money to go buy their health care and to keep what they don't spend. The first part will sustain self-funding a little longer. In a lot of cases, the latter will actually move the self-funded market to a fully insured marketplace. And last, there is stability and affordability where employers can rely on the fact that their employees are not going to be back in 2 or 3 years saying, you're not paying me enough to afford my health care in this exchange, then they won't evolve to the ultimate defined contribution model. But if you can create a model that allows for that sustainability of an affordable product, then you'll see a move from self-funded to fully insured in the large group space as employers move to defined contribution.

Matthew Borsch - Goldman Sachs Group Inc., Research Division

Let me ask a couple more. Well, first, a fairly narrow question which is, as you move through this year and you're starting to price more and more of health reform into midyear renewals, are you finding the marketplace, whether defined as that your customers who were seeing the rate renewals, your competitors and the regulators, you see as moving relatively smoothly? Is there acceptance of, okay, well, yes, there's this industry fee and, yes, there's this reinsurance charge? Or how bumpy is that?

Mark T. Bertolini

Well, I think in the large employer space, there are a lot of employers waking up as they're putting together their 2014 operating plans to all these fees. In the same way, and I mean it, I thought we were immune to this. I mean, that's what I think was involved during the debate back in 2009 and 2010. And so we're having a lot of conversations with benefits staff and saying, I've just been to the CEO. They've showed him what it's going to cost and they're not happy. What can we do to change this? So I think that is a new evolution and I'm now getting a lot of my friends on the business council and on the BRT calling me and saying, what's this all about and what can we do about it. So I think a little late, but I think there's some opportunity in that. In the smaller employer market, the middle market, we're pricing these into the product, largely taxes and fees right now because we're really pushing to renew people for another year into 2014 to withhold some of impact to the Affordable Care Act out to a later date, which allows for them to see how this is going to go and the potential for some change. I think the Democrats are now sufficiently, particularly on the House side, are sufficiently concerned about how bumpy the implementation of this act is going to be, that they're actually asking -- I've got a meeting with the Democratic Caucus coming up soon to discuss what we would see as the ways of improving the Affordable Care Act, given how bumpy it could be. The thing hasn't been touched since it was implemented other than through regulation, and so I think there's some appetite to think about how we could improve the overall effect. So I would say, so far so good from the employer community. We're not seeing any dramatic trends one way or the other in smaller employer self-funding. I mean, there is some of that, but there always is. The reinsurance market is pretty healthy right now, so you're able to get good rates. When it hardens, which it does on a pretty regular cycle, that will be the poignant to whether or not you know that's a sustainable trend. We're involved in some of that. But the real issue right now, I think, is most employers just want to renew and hold, let's see what happens. It helps to actually blunt the impact of all the impacts of Affordable Care Act and their rates.

Matthew Borsch - Goldman Sachs Group Inc., Research Division

Right. And related to that, we've experienced now a little bit of fits and starts. But basically, 3.5 years of pretty low, pretty manageable trend rates, some of that clearly -- or seems clear relates to the economy. But how much of that is -- how do you break it down now? I mean, I think a couple of years ago, if I talked to you about this, you would have been more cautious in saying, "Well, we just have to assume tomorrow it's going to be brought back up again." And I think there's more of a thinking that at least some of this is sustainable.

Mark T. Bertolini

I think the Kaiser Family Foundation released a report in April that pointed out that almost more than 2/3 of this is related to the economy. Having said that, if you look at the personnel wealth and you look at the personnel disposable income of the American public versus where they were in 2008, it's still a lot lower. And so how quickly will this recover if the economy recovers? Consumer confidence is up to where it was over in 2008, and we're still not seeing the kinds of impacts in the utilization that we would expect to see in a robust economic recovery around trend. So I am not, to be clear for everybody in the room, not declaring a new normal. But the real industry will be when employment returns in any significant way, will people go back to get health care the same way they were before the recession? And we'll watch things like dental services, which tend to go away completely in down economies, how quickly those come back. Prescriptions, I think, are less of an issue these days based on the change in pharmaceuticals in the marketplace. Elective surgeries, I mean, we're not seeing the kind of things we would see and what we would call an escalating trend that we could rely on. The other part you have to take into effect here is that you got a lot of costs going into the system around health care reform. And plan designs are improving and we price that in. So in a way, that's predicting and increasing utilization because we're going to a higher actuarial benefit.

Matthew Borsch - Goldman Sachs Group Inc., Research Division

Right, right. Okay. Sorry, let me just -- and as always, we can open this up to any questions from the audience. Let me ask about the employer market as we look into 2014. Are your larger employers who are now in the selling season, are they just hunkering down ahead of next year? Is there an appetite for making changes even with the health reform implementation in the backdrop for January 1, albeit it's not impacting the large employers as much? What are you thinking of it?

Mark T. Bertolini

I think the general economic conditions and how they're doing relative to their own company performance is having more to do with how they're thinking about health care reform and the costs associated with it than just health care reform in and of itself. So if you got an industry that's struggling, hitting its numbers, they're looking for every opportunity they can to fix their costs in health care reform and all the models around it. It gives them opportunities to actually start to introduce notions like defined contribution that they otherwise would not have been able to do. So they can use the Affordable Care Act and health care reform as sort of the Trojan horse to get changes into the way their benefits are structured as a company. So we have some companies that actually have bronze, silver, gold and platinum plans in their own employee offering as they prepare to think about how they could transition to something different in the marketplace. We have some large employers who are saying, maybe I ought to move all my retirees into an exchange and all my active into an exchange. How quickly can I do that and what's feasible and are looking at it, private exchange models? And so there's a lot of -- the iron's hot, let's hit it as many times as we can given where our own financial situation is. There's a lot of dollars tied up in employment -- employee compensation and benefits. Even some employers are saying, what if our value proposition was just the total dollar amount? All of the things that we offer in place, wages, benefits, tuition reimbursement, commuting allowance, what if we put that all into one bucket and said you spend it the way you want to.

Matthew Borsch - Goldman Sachs Group Inc., Research Division

Right, interesting. And as you put together your combined offerings with Coventry, is that helping make a stronger offering at the national level? Or how is that going to help you?

Mark T. Bertolini

Coventry is a local market player and so I think our operating model that we've adopted now is we've moved to the Coventry operating model in the local market with a much stronger focus on the local market, much stronger accountability for local market, the P&L based on the local market dynamics for small, individual and middle market and Medicare individual sales. And so I would say, if you looked at our staffing structure as a result, we've made decisions 2 layers down into the organization already. We have as many leaders in the field that are from Coventry as we do from Aetna in the field organization. So our model is moving from a Hartford-centric consumer segment model in small group, individual and middle market to a local market model focused on the local geography. And talent is important to do that and Coventry gave us the opportunity to move to that kind of talent model in the organization.

Matthew Borsch - Goldman Sachs Group Inc., Research Division

Is that more like the model that you were accustomed to when you were coming up in the earlier phase?

Mark T. Bertolini

Yes, that's where I grew up, strong local market presence and you have more latitude in the local markets and having a stronger local presence in the community.

Matthew Borsch - Goldman Sachs Group Inc., Research Division

Yes, right.

Mark T. Bertolini

And so we're moving to that model. We moved away from that in the late 90s at Aetna, and now we're finally coming back to that and use the Coventry acquisition as a way to culturally and talent-wise build a capability to move to that kind of model in the market.

Matthew Borsch - Goldman Sachs Group Inc., Research Division

There's a question here in the audience.

Unknown Analyst

You said you are participating in 14 to 15 states and Coventry has a -- participate in 14 to 15 states and Coventry has a different model. Could you explain how you selected your states and why you avoided the other ones? And what the real difference is between the 2 models, Coventry and yours?

Mark T. Bertolini

Yes. So 14 states we filed in already. So we're in 14 so we won't -- there won't be a 15th from a standpoint of the Aetna approach to the public exchanges. And we selected those on the basis of having enough of a geographic presence to have the right pricing, the cost structure to be able to put an affordable product in the marketplace. And so, so far in Connecticut, we're the most affordable plan in the Connecticut spectrum on an average basis across all the plans. And so we look at whether or not we can really be effective in competing in that marketplace. The Coventry model is very much focused on local markets, secondary markets, where there are 2 health systems in place, where you could actually do a deal, a very small network with one of the health systems and drive after the low-income subsidy population. And the interesting part of that is that you're working in these communities where people are actually working. They just don't have access to go to health insurance. And if you can get enough of a subsidy for them, you can actually get some good membership that have been using the system anyway responsibly for the most part. So we're looking at those markets where they made those choices, Idaho, for example, and made those choices to decide whether or not how many of those we want to play in and experiment with. So it gave us a very different view of one going after low-income subsidy people in the right kind of markets, secondary markets, versus the major metropolitan areas and larger markets where we've approached it from a standpoint of having an affordable product across all categories.

Matthew Borsch - Goldman Sachs Group Inc., Research Division

And let me ask a question as you continue to broaden your ACS relationships. How was that playing out in some sort of quasi-new markets where you've used an anchor system to give you probably a more narrow, but substantially lower price point? Because you're now selling that going into January.

Mark T. Bertolini

Right. So Virginia, we now have Inova with Innovation Health Plans, which we created with Inova. That's a joint venture. Carilion in the southwest, which has a market of 1 million people and then a bunch of core system in the southeast. So we now have a statewide ACO network, which we rolled together in an offering for all 200,000 state of Virginia employees, which we won the contract as 1 of 2 carriers to participate. So there is a perfect experiment, wide and [indiscernible] backyard of what the ACO model can do to put an affordable product in the marketplace. And a subsegment of each of those programs, Carilion, actually has their own product in the marketplace for Small Group and Individual for a while, but actually went into the state and got a Medicaid risk contract without going through a procurement cycle. So they went inside, we're a health system here, we'd like to take risk in Medicaid, how can we get that deal. So we view these ACOs as ways of getting at all the product mix. The beauty of having all the products with each of these systems in the state of Virginia is we're able to eliminate the cost shift across payers because we pay them appropriately for the Medicare Advantage risk they take, we pay them appropriately for the Medicaid risk they take, and as a result, we're getting anywhere from 25% to 35% reductions in unit price on the commercial side to put of a Small Group and Individual product into the marketplace. And so when you eliminate the cost shift, you're eliminating really the 40% margin that they put in the commercial business to offset but they're getting underpaid on Medicaid and Medicare. So we think this is a powerful model. And so I think Virginia is going to be a perfect example of that. Another place where we're doing it is in Maine, where the state of Maine gave us all their employees and gave us a contract to create an ACO network across Maine, all with the goal of holding Maine's employee health costs flat for the next 5 years. So building in programs and designs that way. So in Maine, we're doing that. And then we have the Banner system down in Arizona. We now have 23 of these things up and running. We have 36 in a letter of intent, and we have 200 in the pipeline. The pipeline never seems to go down every though we signed up more of these deals. So we're very confident in our guidance around how much revenue and membership will come from these members in 2013, and we're watching them ramp up as they go into the market with each of these products. So we're feeling good about where we are. Now all that has to really work and we're still a little early, but what we've seen so far, we're feeling pretty good about.

Matthew Borsch - Goldman Sachs Group Inc., Research Division

And I would think that given your emphasis on this, that you're ahead of competing plans with the number and depth of relationships that you have.

Mark T. Bertolini

Well, because we private label this and because we allow the systems to use it for any of our competitors. Some of our competitors are categorizing our approach as insane. But we think it redefines the industry because we get the system in place and we have a lock on that relationship and we're getting a piece of every risk deal they do, including with our competitors. We've really fundamentally redesigned our relationship on that end of the business and can -- and then, I think, with our mobile strategy on the other side and the work we're going to do on private exchanges, we start to redefine how this industry works. And we think it's disruptive.

Matthew Borsch - Goldman Sachs Group Inc., Research Division

Right. Are you just maybe -- may not happen on a significant scale, but are you concerned that some competitors will or are acquiring the provider assets that you're partnering with?

Mark T. Bertolini

I don't think they'll ever be able to acquire enough to damage our business model. They may try to lock us out of certain markets. I don't think that will be sustainable, and that's -- God bless that I've done this 3 times and sold them 3 times and I know how hard that is. And it's really capital-intensive and doesn't allow you to scale on a broad enough basis. So we believe this approach allows us to use our capital effectively, the technology, the incremental cost and the technologies really well, and we think there has a bigger opportunity to get engaged on a broader basis.

Matthew Borsch - Goldman Sachs Group Inc., Research Division

And let's just -- if we could talk on Medicare Advantage for a moment and how you're thinking about that headwind going into next year now that the bids have been submitted last week. Obviously, that's a closed-door process at this point. But is that -- is it going to be a combination of profit margin and benefit sacrificed? Or you don't think that, that margin sacrifice is going to be needed on this going into '14?

Mark T. Bertolini

I think you got to look at 2014 and 2015 because 2015, things aren't going any easier, right? You got all the impacts and the end of the STARS program pilot in 2015. So if you look at a 2-year review of this, we definitely have time to work on provider contracts and do more on provider contracts, and that levers a bigger lever for us to pull than some of our competitors. So we have more room there. On the care management side, we're pretty far advanced so we have less of a lever to pull there than some of our competitors. And then you got all the -- then when you do medical management, you do provider contracting. The SG&A, we're automating more and more and more of our program. We have artificial intelligence that actually calls our senior members for renewal and can talk to them over an extended period of time and respond, including their term and tender, and they actually love David. They think he's great. They know he is a machine, but they can talk to him for 12 minutes and that he won't get tired of talking to them. And they're looking if the price is right or they'll be leaving this. And so they love that capability. So more of that, so it's not tying up personnel and driving up costs and it gives us an opportunity to have an impact on that difference. I think, ultimately, you have to get benefits and there will be some of that over the next 2 years. I think we're going to have to do that. Then that number gets skinnier every year. But I think you have to take the populations apart and you have to look at the people that are aging into Medicare today, who are much more receptive to out-of-pocket cost changes year-over-year because they're seeing it with their employer. They're much more receptive to managed care because they had it with their employer, and we're seeing much more conversion of that population, the baby boomer population, than the 75-year-olds who have actually ripped their red, white and blue card out of their hands. And along with the product mix we have, including MedSup, when people do come out of Medicare Advantage, MedSup is the first place they land, which gives us an opportunity later. So I think the costs are going to be tough. We're going to see upward pressure on the MBRs on Medicare, particularly you'll just see sequestration. So as we look at this year and into next year, upward pressure on MBRs in Medicare Advantage. You can't -- we've now got a bigger PDP population with the Coventry acquisition, which you can't pass any of the sequestrations we're on. So that has upward pressure. Think of the commercial pressures aren't there, and those are holding. So we think with the diversification of our portfolio and commercial versus the government business, that we've had a clear path to be able to sustain it for the next couple of years and come up the other end in a stronger way. It's not going to be as easy as it was 2 or 3 years ago. So it's not going to be like rolling them up and putting the cash in the bank. We're going to have to work hard to make it work.

Matthew Borsch - Goldman Sachs Group Inc., Research Division

Right. We're almost out of time, so if there are any more questions to anyone sitting on. There's one.

Unknown Analyst

Can you just talk about the outlook for the capital structure coming out of the Coventry acquisition in terms of deleveraging over the next couple of years?

Mark T. Bertolini

So we're committed, very much committed, to getting down to 35% over next 2 years, and the sooner the better from our perspective. There are some tranches in the Coventry deck coming up for renewal, so we'll solve it through that process in a big way. We still have that enough cash to pay our dividend and to invest in the business and continue to buy back shares. So one of the real attractive parts of doing this deal at the time we did it is it gives us much greater capital reserve as an organization, both from just the sheer capital size and revenue, but also from the cash flow that this business will throw off and our ability to manage that through this difficult time. So going into 2014 with high-single-digit margins and this kind of capital have been reserved makes us feel good about being able to weather whatever the market will throw at us in 2014.

Matthew Borsch - Goldman Sachs Group Inc., Research Division

All right. With that, I think we're out of time. I'd like to thank Mark Bertolini again for being here this year and to the rest of the Aetna team.

Mark T. Bertolini

Thanks, Matt.

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Source: Aetna Inc. Presents at Goldman Sachs 34th Annual Global Healthcare Conference, Jun-12-2013 08:40 AM
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