RESIGNATION RAISES QUESTIONS FOR AETNA'S HEALTH CARE STRATEGY

HARTFORD, Conn.-The surprise resignation last week of Joseph T. Sebastianelli as president of Aetna Inc. could be a blow to implementation of the insurer's health care strategy, some analysts say.

But others believe the resignation of Mr. Sebastianelli, who was the expected successor to Aetna Chairman and Chief Executive Officer Ronald E. Compton, will not necessarily hamper the company's operations.

Mr. Sebastianelli, former co-president of U.S. Healthcare Inc., which Aetna acquired last year, said in his letter of resignation, "The demands of my job and my personal responsibilities, including my family, are incompatible."

The resignation is effective June 1.

Mr. Compton, who is scheduled to retire next March, said he accepted the resignation with regret. "Our efforts to complete the transformation of Aetna into a growth company that meets the needs of its customers for high quality health and related benefits and financial services will continue unabated," he said. Mr. Compton will re-assume the title of president, which he had just relinquished to Mr. Sebastianelli in March.

A possible internal candidate for the job is Vice Chairman Richard L. Huber, though Aetna may decide to seek someone outside the company.

"It's not good news," said Michael LeConey, an analyst with National Securities Inc. in New York. Mr. Sebastianelli is the linchpin of Aetna's managed care strategy, he said.

"I think it's unfortunate for Aetna in that one of the things that Aetna acquired when they acquired U.S. Healthcare was a culture of managed care, and that was in part embodied in Mr. Sebastianelli," said Doug Sherlock, a health care analyst and editor of Pulse, a Gwynedd, Pa.-based health care newsletter.

However, Mark Jamilkowski, an analyst with Hartford, Conn.-based Conning & Co., said that while he is sure Mr. Sebastianelli "would have made a more than capable candidate, it may be in Aetna's best interest to perhaps get somebody with a stronger familiarity with other lines of business, such as the annuity line and international operations. Dick Huber fits that bill very nicely."

"The organization has a tough decision to make" as to who will succeed Mr. Sebastianelli, said Larry Mayewski, senior vp at A.M. Best Co., adding that it is premature to judge the impact of his resignation.

While there is still a significant amount of talent within the organization, Mr. Mayewski said, "I think that it will all come down to whether the board is looking for a high-profile leader or somebody internally who is less high profile, but has demonstrated a significant amount of competence."

Meanwhile, in spite of Mr. Sebastianelli's statement, industry speculation remains as to whether there are undisclosed reasons for his unexpected resignation that may be connected with the company's operations.