<PAGE>

                          SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C.  20549

                                      Form 10-Q

                   Quarterly Report Pursuant to Section 13 or 15(d)
                        of the Securities Exchange Act of 1934


For the quarterly period ended September 30, 1996         Commission file number
                              ------------------                       33-81010
                                                                       --------



                   Aetna Insurance Company of America
                   ------------------------------------
    (Exact name of registrant as specified in its charter)


              Connecticut                                       06-1286272
           ----------------                                     ----------
    (State or other jurisdiction of                          (I.R.S. Employer
     incorporation or organization)                         Identification No.)

  151 Farmington Avenue, Hartford, Connecticut                   06156
----------------------------------------------                ---------
    (Address of principal executive offices)                   (ZIP Code)


Registrant's telephone number, including area code     (860) 273-0123
                                                   ------------------

                             None
                        ----------
Former name, former address and former fiscal year if changed since last report


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                        Yes  X         No
                            ---


Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

                                                              Shares Outstanding
Title of Class                                               at October 31, 1996
--------------                                               -------------------

Common Capital Stock,
 par value $2,000                                                   1,275

The registrant meets the conditions set forth in General Instruction H(1)(a) and
(b) of Form 10-Q and is therefore filing this Form with the reduced disclosure
format.


<PAGE>


                          AETNA INSURANCE COMPANY OF AMERICA
       (A wholly-owned subsidiary of Aetna Life Insurance and Annuity Company)


                                  TABLE OF CONTENTS


                                                                            PAGE
                                                                            PAGE
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

    Statements of Income......................................................3
    Balance Sheets............................................................4
    Statements of Changes in Shareholder's Equity.............................5
    Statements of Cash Flows..................................................6
    Condensed Notes to Financial Statements...................................7
    Independent Auditors' Review Report.......................................9

Item 2.  Management's Analysis of the Results of Operations..................10


    PART II.  OTHER INFORMATION

    Item 1.   Legal Proceedings..............................................12

    Item 6.   Exhibits and Reports on Form 8-K...............................12


Signatures...................................................................13

<PAGE>


PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements

                         AETNA INSURANCE COMPANY OF AMERICA
       (A wholly-owned subsidiary of Aetna Life Insurance and Annuity Company)

                                 Statements of Income
                                     (thousands)
<TABLE>
<CAPTION>



                                              3 Months Ended September 30,      9 Months Ended September 30,
                                              ----------------------------      ----------------------------
                                                1996             1995              1996             1995
                                                ----             ----              ----             ----

<S>                                           <C>            <C>                 <C>             <C>
Revenue:
  Charges assessed against policyholders      $  373.2       $    35.2           $  757.6        $   35.2
  Net investment income                          341.0           183.7              673.5           536.7
  Net realized capital losses                        -               -              (17.1)              -
                                              --------       ---------           --------        --------
        Total revenue                            714.2           218.9            1,414.0           571.9

Benefits and expenses:
  Current and future benefits                    533.6               -              714.8               -
  Operating expenses                             343.7            78.3            2,165.3           197.3
                                              --------       ---------           --------        --------
       Total benefits and expenses               877.3            78.3            2,880.1           197.3

Income (loss) before income
   taxes (benefits)                             (163.1)          140.6           (1,466.1)          374.6

Income taxes (benefits)                          (78.6)           49.6             (625.4)          131.3
                                              --------       ---------           --------        --------

Net income (loss)                             $  (84.5)      $    91.0           $ (840.7)       $  243.3
                                              --------       ---------           --------        --------
                                              --------       ---------           --------        --------

</TABLE>


See Condensed Notes to Financial Statements.


                                         (3)

<PAGE>


                         AETNA INSURANCE  COMPANY OF AMERICA
       (A wholly-owned subsidiary of Aetna Life Insurance and Annuity Company)

                                    Balance Sheets
                                     (thousands)



                                              September 30,    December 31,
ASSETS                                             1996            1995
                                                   ----            ----

Investments:
  Debt securities, available for sale:
     (amortized cost: $8,063.1 and $7,953.0)     $  8,140.3      $  8,187.4
Cash and cash equivalents                          35,716.6         4,044.2
Accrued investment income                             182.3           112.6
Premiums due and other receivables                     13.3               -
Deferred policy acquisition costs                  15,724.0         2,066.4
Deferred tax asset                                  2,065.7           467.6
Income taxes receivable                               713.0               -
Other assets                                           13.0             0.8
Separate Accounts assets                          231,798.8        43,810.0
                                                 ----------      ----------

       Total assets                              $294,367.0      $ 58,689.0
                                                 ----------      ----------
                                                 ----------      ----------


LIABILITIES AND SHAREHOLDER'S EQUITY

Liabilities:
  Policyholders' funds left with the company     $ 43,734.9      $        -
  Due to parent and affiliates                            -           174.6
  Other liabilities                                 7,530.7         1,932.6
  Income taxes payable                                112.5           638.8
  Separate Accounts liabilities                   231,798.8        43,810.0
                                                 ----------      ----------
       Total liabilities                          283,176.9        46,556.0
                                                 ----------      ----------

Shareholder's equity:
  Common capital stock, par value $2,000 (1,275
   shares authorized, issued and outstanding)       2,550.0         2,550.0
  Paid-in capital                                   7,550.0         7,550.0
  Net unrealized capital gains                         50.2           152.4
  Retained earnings                                 1,039.9         1,880.6
                                                 ----------      ----------
    Total shareholder's equity                     11,190.1        12,133.0
                                                 ----------      ----------

      Total liabilities and shareholder's equity $294,367.0       $58,689.0
                                                 ----------      ----------
                                                 ----------      ----------




See Condensed Notes to Financial Statements.


                                         (4)

<PAGE>

                          AETNA INSURANCE COMPANY OF AMERICA
       (A wholly-owned subsidiary of Aetna Life Insurance and Annuity Company)

                    Statements of Changes in Shareholder's Equity
                                     (thousands)

                                                  9 Months Ended September 30,
                                                  ----------------------------
                                                    1996            1995
                                                    ----            ----

Shareholder's equity, beginning of period       $  12,133.0     $  11,675.3

Net change in unrealized capital gains and losses    (102.2)          138.8

Net income (loss)                                    (840.7)          243.3
                                                -----------     -----------
Shareholder's equity, end of period             $  11,190.1     $  12,057.4
                                                -----------     -----------
                                                -----------     -----------


See Condensed Notes to Financial Statements.


                                         (5)

<PAGE>

                          AETNA INSURANCE COMPANY OF AMERICA
       (A wholly-owned subsidiary of Aetna Life Insurance and Annuity Company)

                               Statements of Cash Flows
                                     (thousands)
<TABLE>
<CAPTION>


                                                                                9 Months Ended September 30,
                                                                                ----------------------------
                                                                                   1996            1995
                                                                                   ----            ----

<S>                                                                            <C>             <C>
Cash Flows from Operating Activities:
         Net income (loss)                                                     $   (840.7)     $    243.3
         Adjustments to reconcile net income (loss) to net cash (used for)
           provided by operating activities:
         Increase in accrued investment income                                      (69.7)          (33.8)
         Increase in premiums due and other receivables                             (13.3)              -
         Increase in deferred policy acquisition costs                          (13,657.6)       (1,537.2)
         Net change in amounts due to/from parent and affiliates                   (174.6)          117.7
         Net increase in other assets and liabilities                             5,568.8         1,327.7
         Net (decrease) increase in income taxes                                 (2,782.4)          101.2
         Net amortization of (discount) premium on debt securities                  (61.3)           19.7
         Net realized capital losses                                                 17.1               -
                                                                               ----------      ----------
               Net cash (used for) provided by operating activities             (12,013.7)          238.6
                                                                               ----------      ----------

Cash Flows from Investing Activities:
         Proceeds from sales of:
           Debt securities available for sale                                     2,410.0         3,000.0
           Short-term investments                                                       -           500.0
         Cost of investment purchases in:
           Debt securities available for sale                                    (2,458.8)       (3,939.2)
           Short-term investments                                                       -          (492.1)
                                                                               ----------      ----------
               Net cash used for investing activities                               (48.8)         (931.3)
                                                                               ----------      ----------

Cash Flows from Financing Activities:
         Deposits and interest credited for investment contracts                 43,734.9               -
                                                                               ----------      ----------
               Net cash provided by financing activities                         43,734.9               -
                                                                               ----------      ----------

Net increase (decrease) in cash and cash equivalents                             31,672.4          (692.7)
Cash and cash equivalents, beginning of period                                    4,044.2         4,732.7
                                                                               ----------      ----------

Cash and cash equivalents, end of period                                       $ 35,716.6      $  4,040.0
                                                                               ----------      ----------
                                                                               ----------      ----------


Supplemental cash flow information:
    Income taxes paid, net                                                     $  2,232.0      $     30.0
                                                                               ----------      ----------
                                                                               ----------      ----------

</TABLE>


See Condensed Notes to Financial Statements.


                                         (6)

<PAGE>

                          AETNA INSURANCE COMPANY OF AMERICA
       (A wholly-owned subsidiary of Aetna Life Insurance and Annuity Company)

                       Condensed Notes to Financial Statements

1.  BASIS OF PRESENTATION

    Aetna Insurance Company of America (the "Company") is a stock life
    insurance company organized in 1990 under the insurance laws of Connecticut
    and is a wholly-owned subsidiary of Aetna Life Insurance and Annuity
    Company ("ALIAC").  ALIAC is a wholly-owned subsidiary of Aetna Retirement
    Holdings, Inc. ("HOLDCO").  HOLDCO is a wholly-owned subsidiary of Aetna
    Retirement Services, Inc., which is a wholly-owned subsidiary of Aetna
    Services, Inc. ("Aetna") (formerly Aetna Life and Casualty Company).  Aetna
    is a wholly-owned subsidiary of Aetna Inc.

    The financial statements have been prepared in accordance with generally
    accepted accounting principles and are unaudited.  These interim statements
    necessarily rely heavily on estimates, including assumptions as to
    annualized tax rates.  In the opinion of management, all adjustments
    necessary for a fair statement of results for the interim periods have been
    made.  All such adjustments are of a normal, recurring nature.
    The accompanying condensed financial statements should be read in
    conjunction with the  financial statements and related notes as presented
    in the Company's 1995 Annual Report on Form 10-K as filed with the
    Securities and Exchange Commission on March 29, 1996.  Certain financial
    information that is normally included in annual financial statements
    prepared in accordance with generally accepted accounting principles, but
    that is not required for interim reporting purposes, has been condensed or
    omitted.

2.       ACCOUNTING CHANGES

    Financial Accounting Standard ("FAS") No. 125, Accounting for Transfers and
    Servicing of Financial Assets and Extinguishments of Liabilities, was
    issued in June 1996.  This statement provides accounting and reporting
    standards for transfers of financial assets and extinguishments of
    liabilities.  Transactions covered by this statement would include
    securitizations, sales of partial interests in assets, repurchase
    agreements and securities lending.  This statement requires that after a
    transfer of financial assets, an entity would recognize on the balance
    sheet any assets it controls and liabilities it has incurred.  Similarly,
    an entity would remove assets or liabilities from its balance sheet when
    control of the assets has been surrendered or the liabilities satisfied.

    This statement is effective for 1997 financial statements and early
    adoption or retroactive application of this statement is not permitted.
    The Company does not expect the adoption of this statement will have a
    material effect on its financial position or results of operations.

<PAGE>


                          AETNA INSURANCE COMPANY OF AMERICA
       (A wholly-owned subsidiary of Aetna Life Insurance and Annuity Company)

                       Condensed Notes to Financial Statements
                                     (Continued)

3.       RELATED PARTY TRANSACTIONS

    Aeltus Investment Management, Inc. ("Aeltus"), a wholly owned subsidiary of
    HOLDCO, was named the subadviser of all of ALIAC's affiliated mutual funds
    and general account investments effective August 1, 1996 when ALIAC merged
    its investment management operations into those of Aeltus.

    The Company pays Aeltus a fee which, on an annual basis, is .06% of the
    average daily net assets under management.  The amount of such fees for 
    the three and nine months ended September 30, 1996 amounted to 
    $10.2 thousand for both periods.

4.  LITIGATION

    The Company may be involved in lawsuits arising, for the most part, in
    the ordinary course of its business operations.  While the ultimate outcome
    of litigation against the Company cannot be determined at this time, after
    consideration of the defenses available to the Company and any related
    reserves established, it is not expected to result in liability for amounts
    material to the financial condition of the Company, although it may
    adversely affect results of operations in future periods.



5.  SUBSEQUENT EVENT

    On October 23, 1996, the Company received a capital contribution of 
    $20.0 million from ALIAC.


<PAGE>



                    INDEPENDENT AUDITORS' REVIEW REPORT


The Board of Directors
Aetna Insurance Company of America:


We have reviewed the accompanying condensed balance sheet of Aetna Insurance 
Company of America as of September 30, 1996, and the related condensed 
statements of income for the three-month and nine-month periods ended 
September 30, 1996 and 1995, and the related condensed statements of changes 
in shareholder's equity and cash flows for the nine-month periods then ended. 
These condensed financial statements are the responsibility of the Company's 
management.

We conducted our review in accordance with standards established by the 
American Institute of Certified Public Accountants. A review of interim 
financial information consists principally of applying analytical procedures 
to financial data and making inquiries of persons responsible for financial 
and accounting matters. It is substantially less in scope than an audit 
conducted in accordance with generally accepted auditing standards, the 
objective of which is the expression of an opinion regarding the financial 
statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that 
should be made to the accompanying condensed financial statements for them to 
be in conformity with generally accepted accounting principles.

We have previously audited, in accordance with generally accepted auditing 
standards, the balance sheet of Aetna Insurance Company of America as of 
December 31, 1995, and the related statements of income, changes in 
shareholder's equity, and cash flows for the year then ended (not presented 
herein); and in our report dated March 20, 1996, we expressed an unqualified 
opinion on those financial statements. In our opinion, the information set 
forth in the accompanying condensed balance sheet as of December 31, 1995, is 
fairly presented, in all material respects, in relation to the balance sheet 
from which it has been derived.

                                           /s/ KPMG Peat Marwick LLP

Hartford, Connecticut
October 23, 1996



<PAGE>

ITEM 2.  MANAGEMENT'S ANALYSIS OF THE RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

<TABLE>
<CAPTION>


                                                                 3 Months Ended                9 Months Ended
                                                                  September 30,                 September 30,
(Thousands)                                                    1996           1995           1996           1995
-------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>            <C>            <C>            <C>
Charges assessed against policyholders                     $    373.2     $     35.2     $    757.6     $     35.2
Net investment income                                           341.0          183.7          673.5          536.7
Net realized capital losses                                         -              -          (17.1)             -
    --------------------------------------------------------------------------------------------------------------
    Total revenue                                               714.2          218.9        1,414.0          571.9
    --------------------------------------------------------------------------------------------------------------
Current and future benefits                                     533.6              -          714.8              -
Operating expenses                                              343.7           78.3        2,165.3          197.3
    --------------------------------------------------------------------------------------------------------------
    Total benefits and expenses                                 877.3           78.3        2,880.1          197.3
    --------------------------------------------------------------------------------------------------------------
    Income (loss) before income taxes (benefits)               (163.1)         140.6       (1,466.1)         374.6
Income taxes (benefits)                                         (78.6)          49.6         (625.4)         131.3
    --------------------------------------------------------------------------------------------------------------
    Net income (loss)                                      $    (84.5)         $91.0     $   (840.7)    $    243.3
    --------------------------------------------------------------------------------------------------------------
    --------------------------------------------------------------------------------------------------------------
    Net realized capital losses, net of tax
    (included above)                                       $        -     $        -     $    (11.1)    $        -
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
Deposits not included in premiums above:
   Fully guaranteed                                        $ 22,668.9     $  9,200.0     $ 82,310.4     $  9,300.0
   Experience-rated                                          29,885.9              -       43,167.3
   Non-guaranteed                                            46,487.8       18,980.0       98,843.5       19,000.0
                                                           -------------------------------------------------------
   Total                                                   $ 99,042.6     $ 28,180.0     $224,321.2     $ 28,300.0
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
Assets under management: (1) (2)
   Fully guaranteed                                                                      $ 81,811.9    $   8,510.3
   Experience-rated                                                                        43,720.2
   Non-guaranteed                                                                         149,891.7       20,204.6
                                                                                         -------------------------
   Total                                                                                 $275,423.8     $ 28,714.9
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------

</TABLE>

(1) Excludes net unrealized capital gains of $77.2 thousand and $2.2 thousand
    at September 30, 1996 and 1995, respectively.

(2) Includes $141,611.3 thousand and $20,204.6 thousand at September 30, 1996
    and 1995, respectively, of assets held and managed by unaffiliated mutual
    funds.

The Company has reported net losses of $(84.5) thousand for the three months 
ended September 30, 1996, compared to net gains of $91.0 thousand for the 
same period a year ago.  The Company has reported net losses of $(840.7) 
thousand for the nine months ended September 30, 1996, compared to net gains 
of $243.3 thousand for the same period a year ago.  1996 results reflect the 
revenues and expenses associated with commencement of the Company's business 
operations which have produced losses due to start up costs, particularly in 
the first six months of the year.  1995 results reflect investment income on 
the Company's capital partially offset by only minimal start up expenses.


Current and future benefits are primarily amounts credited on investment 
contracts. For the three and nine months ended September 30, 1996, current 
and future benefits exceed net investment income. The lower level of 
investment income is primarily due to lower levels of invested asset caused 
by the payment of start up costs and lower returns on such investments due to 
the short term nature of the portfolio. The Company intends to reposition the 
portfolio into long-term higher yielding securities during the remainder of 
1996. On October 23, 1996, the Company received a capital contribution of 
$20.0 million from ALIAC (see Note 5 of the Condensed Notes to Financial 
Statements).

During the nine months ended September 30, 1996, the Company's net deferred 
tax asset increased by $1,598.1 thousand from December 31, 1995, the benefit 
of which reduced the Company's loss for the same period. This was primarily 
due to losses from commencement of operations discussed above. Management 
believes it is more likely than not that the Company will realize the benefit 
of its net deferred tax assets.

<PAGE>

GENERAL ACCOUNT INVESTMENTS

The Company's invested assets were comprised of the following:

                                            September 30,       December 31,
(Thousands)                                     1996               1995
--------------------------------------------------------------------------------
Debt securities                              $ 8,140.3            $ 8,187.4
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------


At September 30, 1996 and December 31, 1995, all of the Company's debt
securities were issued by the U. S. Treasury.  The average quality rating of the
Company's debt securities portfolio was AAA at both September 30, 1996 and
December 31, 1995.



<PAGE>

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings.

    The Company may be involved in lawsuits arising, for the most
    part, in the ordinary course of its business operations. While the 
    ultimate outcome of litigation against the Company cannot be determined 
    at this time, after consideration of the defenses available to the 
    Company and any related reserves established, it is not expected to 
    result in liability for amounts material to the financial condition of 
    the Company, although it may adversely affect results of operations in 
    future periods.

Item 6.  Exhibits and Reports on Form 8-K.

    (a)  Exhibits

         (27)  Financial Data Schedule.

    (b)  Reports on Form 8-K

         None.





<PAGE>
                                      SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                             AETNA INSURANCE COMPANY OF AMERICA
                                  (Registrant)


   November 14, 1996                   By   /s/   James C. Hamilton
-----------------------                     ---------------------------
(Date)                                          James C. Hamilton
                                                Vice President, Treasurer, and
                                                 Director