Political contributions and related activity report 2006 Aetna PAC and Aetna Inc. 31.05.904.1-06 AETNA PAC BOARD OF OFFICERS FEDERAL CONTRIBUTIONS DIRECTORS — 2006 COMMITTEE Mark Bertolini Thomas Strohmenger Charlie Iovino Executive Vice President, Regional Businesses Chairman Vice President & Counsel Vice President & Head of Federal Government Affairs Mary Claire Bonner Government Affairs Segment Head, Regional Business Thomas Strohmenger Jonathan Topodas Vice President & Head of William Casazza Treasurer and Counsel Government Affairs Senior Vice President and General Counsel Vice President & Counsel Federal Government Affairs Jonathan Topodas James Foreman Vice President & Counsel Executive Vice President, National Businesses Tammy Preisner Federal Government Affairs Assistant Treasurer William Hauser and Administrator Regional Medical Director STATE CONTRIBUTIONS COMMITTEE Manager, Law & Regulatory Affairs Paul Hebert Brooke Flaherty Head, Provider Data Services, Credentialing Senior State Government Affairs Specialist Felicia Norwood, President President and COO, Active Health Kris Frank Senior State Government Paul Silva Affairs Specialist Product Head, Student Health Thomas Strohmenger Vice President & Head of Government Affairs Aetna PAC is a bipartisan political action committee that enables company employees to have a voice with state and federal legislators and offi cials who make laws and policy that have a direct impact on the way the company does business. Its purpose is to collect voluntary contributions from eligible Aetna employees and then use these funds to support candidates for federal and state political offi ce pursuant to our internal contribution guidelines and in accordance with applicable election laws. Aetna PAC began 2006 with a balance of $360,049 and, during the year, eligible Aetna employees contributed an additional $344,547. In 2006, PAC contributions to federal and state candidates, party (and other) committees and leadership PACs that share our company’s interests and values totaled $416,718. As the enclosed statement of cash receipts and expenditures indicates, Aetna PAC entered 2007 with $288,509 available for political contributions. Additionally, in 2006 Aetna Inc. contributed $251,500 in direct corporate contributions to state candidates and party committees in selected states (15 in 2006) where such corporate contributions are permitted. Aetna is an active participant in the political process at all levels of government through Aetna PAC, corporate contributions and corporate political activity, including advocating our views before government directly or indirectly through consultants, trade associations and various coalitions. This report details the political contributions and activity relating to Aetna PAC and Aetna Inc. Thomas C. Strohmenger Chairman Aetna Inc. Political Action Committee 1 Political Contributions Aetna PAC Aetna Inc. sponsors a Political Action Committee (Aetna PAC), which is authorized to contribute to all federal candidates, parties and committees, and to all state candidates, parties and committees in most states; all administrative expenses are paid by Aetna Inc. as specifi cally allowed by law. Aetna PAC is controlled by a Board of Directors (drawn from all segments of the Company); it is further subject to the review and oversight of the Audit Committee of the Aetna Inc. Board of Directors. Aetna PAC is managed by three principal offi cers (Chairman, Treasurer & Counsel and Administrator) and utilizes separate Contributions Committees to make state or federal disbursement decisions. Aetna PAC is governed by federal law (Federal Election Campaign Act) and various state laws where Aetna PAC is registered to make state political contributions. Aetna Inc. also sponsors separate but related state PACs in Connecticut (Aetna PAC- Connecticut*) and New York (Aetna PAC-New York) because those states require such separate registration. The control and management of these two separate PACs are the same as Aetna PAC. Aetna PAC-New York is funded by corporate funds from Aetna Inc. subsidiaries as permitted by New York state law. Some states totally prohibit corporate sponsorship of a PAC resulting in no Aetna PAC activity in those states. In one such state (New Jersey) Aetna employees with a particular interest in New Jersey have privately established an employee-sponsored PAC to facilitate employee contributions to New Jersey state candidates. No Aetna Inc. funds are used to support this New Jersey PAC. Corporate Contributions Aetna Inc. is permitted to contribute corporate dollars to state and local candidates in many, but not all states, and the company takes advantage of this authority in part to better leverage the availability of Aetna PAC dollars. In 2006, such corporate contributions were made in 15 states (see Page 16 for details). The management of Aetna PAC (Audit Committee, Board, Offi cers and Committees) exercises the same supervisory, managerial and operational control over Aetna Inc. corporate contributions and related activity as applicable to Aetna PAC. * Aetna PAC-Connecticut terminated operations as of 12/31/2006 to comply with Connecticut Public Act 05-05. It will be re-registered when allowed under Connecticut Law. 2 Political Contribution Process and Policy Management likelihood of the candidate’s election This same management oversight, success; and recommendations by political contribution policy and The Chairman, Treasurer, and Aetna PAC members. contribution process applicable Administrator of Aetna PAC are to Aetna PAC applies as well to responsible for the day-to-day Process corporate contributions from management of Aetna PAC. These Aetna Inc. offi cers are responsible for the Each contribution goes through a legal solicitation of contributions to and approval process to ensure that Aetna The Audit Committee of the Aetna the disbursement of funds from Aetna PAC complies with federal and state Inc. Board of Directors annually PAC consistent: with state and federal campaign fi nance (and related) laws reviews the political contributions laws; with the contribution policies and and the Aetna PAC By-Laws. The and political activities of Aetna PAC criteria of the Aetna PAC By-Laws; and process for disbursing funds is virtually and Aetna Inc. to ensure compliance with the Aetna PAC process applicable the same whether the contribution with the overall policy, process and to such political contributions. is from Aetna PAC or Aetna Inc. contributions criteria with respect to corporate funds: recommendations for such contributions or activity. Contribution Policy & Criteria supporting a candidate or a committee Aetna PAC is audited annually by are submitted from all areas of the The Contributions Committee KMPG. The results of that audit Company and frequently come from is composed of state and federal and the Aetna PAC Annual Report state or local company personnel who government relations personnel. It are sent to the members of the Audit work in government relations. The considers a number of criteria when Committee of the Aetna Inc. Board recommendation is sent to the State making contribution decisions: the of Directors. or Federal Government Relations candidate’s understanding of and Subcommittee on Contributions, support for the free enterprise system; Contributions to Candidates which meets in-person, by phone the candidate’s need for Aetna PAC or e-mail to discuss and vote Federal candidates assistance; the presence of Aetna $264,500 on such matters. The approved employees, facilities or resources in recommendation is then reviewed by the candidate’s district or state; the the in-house Aetna PAC Counsel and candidate’s demonstrated leadership outside Legal Counsel for legal and or potential for leadership; committee campaign fi nance law compliance assignments and seniority within purposes. When certifi ed as “legal,” Congress or state government; the the paperwork is processed (by the candidate’s involvement with and PAC Administrator for Aetna PAC position on issues affecting health or by Corporate Accounting for care and related group benefi ts; the State candidates corporate funds) and a check is drawn $403,718 and delivered. State contributions include PAC and Corporate contributions. 3 Related Political Activity Aetna utilizes multiple and myriad Organization Total Dues/ Portion Allocated to resources to advocate and advance its Payments Non-Deductible Lobbying position on the issues within the State America’s Health Insurance Plans $950,000 $190,000 and Federal political environment. Coalition for Affordable To this end, in 2006 Aetna spent Quality Healthcare $925,000 $ 648 $2,301,905 on state lobbying The Business Roundtable $226,500 $115,515 expenses* and $2,244,710 on federal lobbying expenses.* US Chamber of Commerce $100,000 $ 34,000 Colorado Association of Health Plans $ 60,000 $ 0 Aetna does not make or engage in independent political expenditure Association of Connecticut Life activity as defi ned under federal and Health Insurance Companies $ 50,784 $ 4,416 election law. Connecticut Association of Health Plans $ 80,000 $ 0 In 2006, Aetna Inc. also spent Georgia Association of Health Plans $ 80,000 $ 40,000 $200,000 on various partisan tax-exempt research and policy Insurance Federation of Pennsylvania $155,711 $ 0 organizations. New Jersey Association of Health Plans $157,823 $ 27,176 A portion of Aetna’s lobbying expenses includes dues and other New York Health Plan Association $129,674 $ 0 payments to trade associations and Virginia