<PAGE> 1

Selected Financial Data

<TABLE>
<CAPTION>

(Millions, except per share data)          1995        1994        1993        1992        1991
                                           ____        ____        ____        ____        ____
<S>                                        <C>         <C>         <C>         <C>         <C>
Revenue:
 Premiums:
  Aetna Health Plans                       $  5,949.7  $  5,611.5  $  4,700.6  $  4,586.7  $  4,467.3
  Aetna Life Insurance & Annuity                178.3       168.3       125.7       111.9       174.5
  International                               1,038.5       887.1       909.5       814.8       500.0
  Large Case Pensions                           264.9       234.4       185.9       204.2       292.4
                                           __________________________________________________________
Total premiums                                7,431.4     6,901.3     5,921.7     5,717.6     5,434.2
_____________________________________________________________________________________________________
Net Investment Income, Fees and Other
 Income, and Net Realized Capital Gains
 and Losses:
  Aetna Health Plans                          1,665.7     1,527.6     1,405.4     1,345.4     1,124.2
  Aetna Life Insurance & Annuity              1,445.9     1,269.1     1,269.6     1,129.9     1,046.6
  International                                 421.3       409.9       369.8       387.6       390.2
  Large Case Pensions                         2,004.0     2,120.8     2,380.1     2,547.1     2,730.6
  Corporate: Other                                9.7        (9.7)       (6.9)      (42.7)      (11.7)
  Federated Investors                               -           -           -           -           -
                                           __________________________________________________________
   Total net investment income, fees
    and other income, and net realized
    capital gains and losses                  5,546.6     5,317.7     5,418.0     5,367.3     5,279.9
_____________________________________________________________________________________________________
     Total Revenue from Continuing 
                                   
                                   
      Operations                           $ 12,978.0  $ 12,219.0  $ 11,339.7  $ 11,084.9  $ 10,714.1
_____________________________________________________________________________________________________
_____________________________________________________________________________________________________
Income (Loss) from Continuing Operations
 before Extraordinary Item and
 Cumulative Effect Adjustments:
  Aetna Health Plans                       $    286.0  $    341.7  $    272.2  $    274.3  $    382.6
  Aetna Life Insurance & Annuity                198.0       159.1       111.4        99.0       115.1
  International                                  86.6        71.2        55.0        25.1        38.2
                                                                                                     
  Large Case Pensions                            89.2        54.4      (822.3)      (17.3)     (167.0)
  Corporate:  Interest                          (70.4)      (60.5)      (44.7)      (50.9)      (65.0)
              Other                            (115.5)     (156.5)     (173.9)     (229.2)     (163.5)
  Federated Investors                               -           -           -           -           -
_____________________________________________________________________________________________________
Income (Loss) from Continuing 
 Operations before Extraordinary Item and
 Cumulative Effect Adjustments                  473.9       409.4      (602.3)      101.0       140.4
_____________________________________________________________________________________________________
Income (Loss) from Discontinued Operations     (222.2)       58.1       290.3       324.8       364.8
_____________________________________________________________________________________________________
Cumulative Effect Adjustments for
 continuing operations                              -           -       (49.2)     (369.8)          -
_____________________________________________________________________________________________________
Net Income (Loss)                          $    251.7  $    467.5  $   (365.9) $     56.0  $    505.2
_____________________________________________________________________________________________________
Net Realized Capital Gains (Losses),
                                    
 Net of Tax (from Continuing Operations) 
 (included above)                                29.5       (41.2)      (42.0)      (76.7)     (200.6)
_____________________________________________________________________________________________________ 
Total Assets (1)                             84,323.7    75,486.7    81,572.8    77,022.0    78,966.8
_____________________________________________________________________________________________________
Total Long-Term Debt                            989.1     1,079.2     1,112.2       900.9       976.0
_____________________________________________________________________________________________________
Minority Interest in Preferred Securities
 of Subsidiary                                  275.0       275.0           -           -           -
_____________________________________________________________________________________________________
Redeemable Preferred Stock,
 Net of Treasury Shares                             -           -           -           -           -
_____________________________________________________________________________________________________
Shareholders' Equity                          7,272.8     5,503.0     7,043.1     7,238.3     7,384.5
_____________________________________________________________________________________________________
_____________________________________________________________________________________________________
Per Common Share Data:
Income (Loss) from Continuing Operations
 before Extraordinary Item and
 Cumulative Effect Adjustments             $     4.16  $     3.63  $    (5.42) $      .92  $     1.28
Income (Loss) from Discontinued
 Operations                                     (1.95)        .51        2.61        2.95        3.31
Cumulative Effect Adjustments for
 continuing operations                              -           -        (.44)      (3.36)          -
Net Income (Loss)                                2.21        4.14       (3.29)        .51        4.59
Dividends Declared                               2.76        2.76        2.76        2.76        2.76
Shareholders' Equity                            63.39       48.85       62.77       65.64       67.09
Market Price at Year End                        69.25       47.13       60.38       46.50       44.00
_____________________________________________________________________________________________________
<FN>

See Notes to Financial Statements and Management's Discussion and Analysis for significant events
affecting the comparability of current year results with 1994 and 1993 results.

(1) Total assets at December 31, 1995, 1994, and 1993 include $10.6 billion, $12.4 billion and 
    $15.2 billion, respectively, of assets attributable to discontinued fully guaranteed large 
    case pension products.
</TABLE>


<PAGE> 2

Selected Financial Data

<TABLE>
<CAPTION>

(Millions, except per share data)          1990       1989       1988       1987       1986       1985
                                           ____       ____       ____       ____       ____       ____
<S>                                        <C>        <C>        <C>        <C>        <C>        <C>
Revenue:
 Premiums:
  Aetna Health Plans                       $  4,190.1 $ 3,730.7  $ 2,770.1  $ 2,562.8  $ 2,893.5  $ 2,556.0
  Aetna Life Insurance & Annuity                272.9     302.0      286.7      270.0      253.1      242.3
  International                                 415.9     310.5      389.1      421.8      343.1      372.7
  Large Case Pensions                           597.0   1,303.8      855.3    1,767.5    1,130.2      410.9
                                           ________________________________________________________________
Total premiums                                5,475.9   5,647.0    4,301.2    5,022.1    4,619.9    3,581.9
___________________________________________________________________________________________________________
Net Investment Income, Fees and Other
 Income, and Net Realized Capital Gains
 and Losses:
  Aetna Health Plans                          1,086.8     920.8      703.9      564.4      663.2      660.1
  Aetna Life Insurance & Annuity                973.2     865.5      715.0      631.7      593.4      475.6
  International                                 257.0     258.8      244.7      277.2      200.5      133.1
  Large Case Pensions                         3,069.9   3,162.5    3,083.7    2,884.7    2,917.9    2,709.3
  Corporate: Other                                (.7)    (17.1)      17.6       15.4      (79.3)     (13.7)
  Federated Investors                               -     240.3      193.5      209.2      180.6      149.3
                                           ________________________________________________________________
   Total net investment income, fees
    and other income, and net realized
    capital gains and losses                  5,386.2   5,430.8    4,958.4    4,582.6    4,476.3    4,113.7
___________________________________________________________________________________________________________
     Total Revenue from Continuing 
                                   
                                   
      Operations                           $ 10,862.1 $11,077.8  $ 9,259.6  $ 9,604.7  $ 9,096.2  $ 7,695.6
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
Income (Loss) from Continuing Operations
 before Extraordinary Item and Cumulative
 Effect Adjustments:
  Aetna Health Plans                       $    288.3 $   254.8  $   152.4  $   182.1  $   277.6  $   289.5
  Aetna Life Insurance & Annuity                 85.5      67.7       82.6       61.7      112.6       72.8
  International                                 (48.2)    (14.1)     (18.0)      28.5       39.1      (32.7)
  Large Case Pensions                             1.1     107.0      125.1       83.8      185.9      144.2
  Corporate:  Interest                          (73.8)    (68.9)     (62.5)     (51.2)     (39.4)     (53.2)
              Other                            (127.9)   (146.4)    (120.8)    (127.7)    (198.8)    (117.9)
  Federated Investors                               -      54.0       54.6       58.3       49.4       38.7
___________________________________________________________________________________________________________
Income from Continuing Operations
 before Extraordinary Item and
                              
 Cumulative Effect Adjustments                  125.0     254.1      213.4      235.5      426.4      341.4
___________________________________________________________________________________________________________
Income (Loss) from Discontinued Operations      489.1     385.3      486.1      631.3      434.0       19.9
___________________________________________________________________________________________________________
Cumulative Effect Adjustments
                             
 for continuing operations                          -         -          -          -          -          -
___________________________________________________________________________________________________________
Net Income (Loss)                          $    614.1 $   676.4  $   713.3  $   915.3  $ 1,015.6  $   365.3
___________________________________________________________________________________________________________
Net Realized Capital Gains (Losses),
 Net of Tax (from Continuing Operations) 
 (included above)                              (117.0)     57.7       34.0      (12.0)      88.6       24.5
___________________________________________________________________________________________________________
Total Assets                                 77,686.1  75,534.2   69,934.4   64,371.8   59,477.1   50,802.9
___________________________________________________________________________________________________________
Total Long-Term Debt                            975.5   1,002.4    1,058.5      902.8      644.2      520.5
___________________________________________________________________________________________________________
Minority Interest in Preferred Securities
 of Subsidiary                                      -         -          -          -          -          -
___________________________________________________________________________________________________________
Redeemable Preferred Stock,
 Net of Treasury Shares                             -         -      118.6      177.1      200.0       75.0
___________________________________________________________________________________________________________
Shareholders' Equity                          7,072.4   6,936.7    6,453.8    6,015.7    5,633.4    4,745.9
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
Per Common Share Data:
Income (Loss) from Continuing Operations
 before Extraordinary Item and
 Cumulative Effect Adjustments             $     1.12 $    2.25  $    1.82  $    1.92  $    3.60  $    3.00
Income (Loss) from Discontinued 
 Operations                                      4.40      3.44       4.31       5.56       3.89        .19
Cumulative Effect Adjustments for
 Continuing Operations	                             -         -          -          -          -          -
                                                                                                           
Net Income (Loss)                                5.52      6.02       6.25       7.91       8.87       3.23
Dividends Declared                               2.76      2.76       2.76       2.76       2.64       2.64
Shareholders' Equity                            64.23     61.94      57.50      52.95      48.58      41.19
Market Price at Year End                        39.00     56.50      47.25      45.25      56.38      53.50
___________________________________________________________________________________________________________
<FN>

See Notes to Financial Statements.
</TABLE>

<PAGE> 3

Consolidated Results of Operations:  Operating Summary

<TABLE>
<CAPTION>

(Millions, except per share data)                1995           1994           1993      
_________________________________________________________________________________________

<S>                                              <C>            <C>            <C>

Premiums                                         $  7,431.4     $    6,901.3   $  5,921.7
Net investment income                               3,575.1          3,631.4      3,966.6
Fees and other income                               1,924.3          1,741.5      1,512.6
Net realized capital gains (losses)                    47.2            (55.2)       (61.2)
                                                 ________________________________________ 
    Total revenue                                  12,978.0         12,219.0     11,339.7
                                                 ________________________________________

Current and future benefits                         9,027.2          8,652.0      8,189.2
Operating expenses                                  3,087.5          2,805.9      2,632.8
Amortization of deferred policy
    acquisition costs                                 137.1            133.6        101.7
Loss on discontinuance of products                        -                -      1,270.0
Severance and facilities charge                           -                -        160.7
                                                 ________________________________________
    Total benefits and expenses                    12,251.8         11,591.5     12,354.4
                                                 ________________________________________
Income (Loss) from continuing operations
    before income taxes, extraordinary item
    and cumulative effect adjustments                 726.2            627.5     (1,014.7)
Income taxes (benefits)                               252.3            218.1       (412.4)
                                                 ________________________________________ 
Income (Loss) from continuing operations
    before extraordinary item and cumulative
    effect adjustments                                473.9            409.4       (602.3)
Income (Loss) from Discontinued Operations, 
    net of tax                                       (222.2)            58.1        290.3
                                                 ________________________________________

Income (Loss) before extraordinary item and
    cumulative effect adjustments                     251.7            467.5       (312.0)
Extraordinary loss on debenture redemption,
    net of tax                                            -                -         (4.7)
Cumulative effect adjustments, net of tax                 -                -        (49.2)
                                                 ________________________________________ 

Net income (loss)                                $    251.7     $      467.5   $   (365.9)
_________________________________________________________________________________________ 
                                                 ________________________________________ 
Net realized capital gains (losses) from
    continuing operations, net of tax
    (included above)                             $     29.5     $      (41.2)  $    (42.0)
_________________________________________________________________________________________ 
                                                 ________________________________________ 
Per common share data:
    Income (Loss) from continuing operations
       before extraordinary item and
       cumulative effect adjustments             $     4.16     $       3.63   $    (5.42)
    Income (Loss) from Discontinued Operations,
       net of tax                                     (1.95)             .51         2.61
    Extraordinary loss on debenture redemption,
       net of tax                                         -                -         (.04)
    Cumulative effect adjustments, net of tax             -                -         (.44)
                                                 ________________________________________ 
       Net income (loss)                         $     2.21     $       4.14   $    (3.29)
                                                 ________________________________________ 
                                                 ________________________________________ 

    Dividends declared                           $     2.76     $       2.76   $     2.76
                                                 ________________________________________
                                                 ________________________________________

    Shareholders' equity                         $    63.39     $      48.85   $    62.77
_________________________________________________________________________________________
                                                 ________________________________________

Sources of earnings:
  Aetna Health Plans                             $    286.0     $      341.7   $    272.2
  Aetna Life Insurance & Annuity                      198.0            159.1        111.4
  International                                        86.6             71.2         55.0
  Large Case Pensions                                  89.2             54.4       (822.3)
  Corporate:  Interest                                (70.4)           (60.5)       (44.7)
              Other                                  (115.5)          (156.5)      (173.9)
                                                 ________________________________________ 
    Total from continuing operations                  473.9            409.4       (602.3)
  Discontinued Operations                            (222.2)            58.1        290.3
  Extraordinary loss on debenture redemption,
     net of tax                                           -                -         (4.7)
  Cumulative effect adjustments, net of tax               -                -        (49.2)
                                                 ________________________________________ 

  Net income (loss)                              $    251.7     $      467.5   $   (365.9)
_________________________________________________________________________________________ 
                                                 ________________________________________ 
<FN>
* This Management's Discussion and Analysis is as of February 6, 1996.
</TABLE>

<PAGE> 4

Overview

The company entered into a definitive agreement, dated 
November 28, 1995, to sell its property-casualty operations to The 
Travelers Insurance Group Inc. for $4.0 billion in cash, subject 
to various closing adjustments.  The sale is subject to state 
regulatory approval and other customary conditions and is expected 
to be completed no later than midyear 1996.  (Please see "Sale of 
Property-Casualty Operations" on page 6.)

The agreement to sell the company's property-casualty business 
reflects the company's strategic decision to focus its resources 
on pursuing growth opportunities in its managed care business and 
other remaining businesses.  The company is considering a variety 
of strategic options, and is looking for opportunities to make 
managed care investments or acquisitions to further strengthen the 
company's overall market position.  The company also expects to 
evaluate opportunities for growth of its financial services 
businesses and strengthen their competitive position, and 
opportunities to develop its current international operations and 
enter selected new markets where suitable opportunities exist.

Net Income

Aetna's 1995 net income was $252 million, compared with net income 
of $468 million in 1994 and a net loss of $366 million in 1993.  
Net income in 1995 included a loss from property-casualty 
operations (Discontinued Operations) of $222 million compared with 
income of $58 million in 1994 and $290 million (includes a $276 
million cumulative effect benefit for accounting changes) in 1993.  
The 1993 net loss also included a charge of $49 million for 
cumulative effect adjustments for accounting changes.  (Please see 
Notes 1 and 2 of Notes to Financial Statements for further 
discussions related to cumulative effect adjustments.)

Adjusted Earnings from Continuing Operations

For purposes of the discussions which follow, adjusted earnings 
represent income (loss) from continuing operations before 
cumulative effect adjustments excluding after-tax net realized 
capital gains (losses) in 1995, 1994 and 1993, the 1993 after-tax 
severance and facilities charge and the 1993 after-tax loss on 
discontinuance of products.  Adjusted earnings by segment were as 
follows:

<TABLE>
<CAPTION>
(Millions)                                       1995        1994        1993   
________________________________________________________________________________
<S>                                              <C>         <C>         <C>
Aetna Health Plans                               $ 293.1     $ 355.3     $ 332.4
Aetna Life Insurance & Annuity                     171.0       162.9       125.3
International                                       88.7        69.1        73.7
Large Case Pensions                                 78.2        71.4        47.4
Corporate                                         (186.6)     (208.1)     (209.7)
</TABLE>


<PAGE> 5

Overview (Continued)

Summary Segment Results

The following summary of segment results is based upon adjusted 
earnings.

Aetna Health Plans:

Results in 1995 reflected an increase in managed care investments 
and a deterioration of medical trend in the first half of the year 
on indemnity and preferred provider organization health products, 
partially offset by increased earnings from health maintenance 
organization operations and improved expense management in the 
Specialty Health and Group Insurance businesses.  Results in 1994 
reflected improved earnings in the Health business.

Aetna Life Insurance & Annuity:

Results improved in 1995 primarily due to increased revenues 
associated with growth in assets under management, which were 
partially offset by an increase in operating expenses reflecting 
continued business growth.  Results in 1994 principally reflected 
a decrease in operating expenses and strong sales growth.

International:

Results in 1995 and 1994 reflected continued improvement in the 
Pacific Rim operations and increased investment income from 
Mexico.  Results in 1994 also reflected earnings from the 
company's increased investment in a Mexican insurance operation.

Large Case Pensions:

Results in 1995 improved, reflecting an increase in fees and other 
income and in net interest margins partially offset by the effect 
of reduced net investment income as a result of returning capital 
to the parent company and lower interest rates.

Corporate:

Results in 1995 and 1994 reflected higher interest expense 
resulting from the issuance by a subsidiary of 9 1/2% cumulative 
monthly income preferred securities in November 1994.  Results in 
1995 and 1994 also reflected lower corporate staff area expenses 
as a result of previous restructurings.

Results of Continuing Operations

Income from continuing operations (before extraordinary item and 
cumulative effect adjustments) was $474 million in 1995, compared with 
$409 million in 1994 and a loss of $602 million in 1993.  The following 
significant factors affect the comparison of results of continuing 
operations:

Results of continuing operations in 1993 included an after-tax charge 
for anticipated future losses on discontinuance of fully guaranteed 
large case pension products of $825 million and losses on these 
discontinued products of $90 million ($53 million excluding net realized 
capital losses).  Results of discontinued products for the years ended 
December 31, 1995 and 1994 were charged against the reserve for 
anticipated future losses and did not impact the company's net income. 
(Please see pages 23 through 26 for a discussion of discontinued 
products.)


<PAGE> 6

Overview (Continued)

Results of Continuing Operations (continued)

Results of continuing operations in 1993 included an after-tax severance 
and facilities charge of $104 million.  (Please see "Severance and 
Facilities Charge" on page 9.)

Results of continuing operations in 1995 included net after-tax realized 
capital gains of $30 million compared with net after-tax realized 
capital losses of $41 million in 1994 and $42 million in 1993.  (Please 
see "Net Realized Capital Gains and Losses" on page 7.)

Sale of Property-Casualty Operations

The company entered into a definitive agreement, dated November 28, 
1995, to sell its property-casualty operations to The Travelers 
Insurance Group Inc. ("Travelers") for $4.0 billion in cash, subject to 
various closing adjustments.  The sale is subject to state regulatory 
approval and other customary conditions and is expected to be completed 
no later than midyear 1996.  In light of the sale agreement, the 
company's property-casualty operations have been classified as 
Discontinued Operations. Results of the Discontinued Operations will be 
included in the company's consolidated results of operations until the 
closing.  While such results will not adjust the purchase price, income 
or loss from such operations will decrease or increase, respectively, 
the gain expected to be recognized on such sale.  

As part of the agreement, Travelers will sublease the space currently 
occupied by the company in the CityPlace office facility in Hartford for 
eight years at current market rates.  The company expects to take a 
charge of approximately $190 million (after tax).  Such charge 
represents the present value of the difference between rent required to 
be paid by the company under the master lease and future rentals 
expected to be received by the company.  The company also anticipates 
taking other restructuring charges in 1996 due to actions expected to be 
taken to reduce the level of corporate expenses and other costs 
previously absorbed by the property-casualty operations.

For a further discussion of Discontinued Operations, please see 
"Discontinued Operations - Property-Casualty Operations" on page 28.


<PAGE> 7

Overview (Continued)

Net Realized Capital Gains and Losses

Net realized after-tax capital gains (losses) included in results of 
continuing operations, on assets supporting discontinued products, 
allocable to experience rated pension contractholders, and on assets 
related to Discontinued Operations were as follows:

<TABLE>
<CAPTION>
(Millions)                                       1995        1994        1993    
_________________________________________________________________________________
<S>                                              <C>         <C>         <C>
Net realized capital gains (losses) from sales   $  38.5     $ (11.1)    $  291.7

Net realized capital losses from changes in
  reserves for mortgage loans and real estate       (9.0)      (27.7)      (321.1)

Net realized capital losses from
  write-downs of debt and equity securities            -        (2.4)       (12.6)
                                                 _______     _______     ________ 

Net realized capital gains (losses) included in 
  results of continuing operations               $  29.5     $ (41.2)    $  (42.0)
                                                 _______     _______     ________ 
                                                 _______     _______     ________ 

Net realized capital losses on assets
  supporting discontinued products
  (excluded above)                               $  (8.6)*   $(135.8)*   $     **
                                                 _______     _______     ________
                                                 _______     _______     ________

Net realized capital gains (losses) allocable
  to experience rated pension contractholders
  (excluded above)                               $  59.4     $(126.8)    $ (117.1)
                                                 _______     _______     ________ 
                                                 _______     _______     ________ 

Net realized capital gains (losses) on
  assets related to Discontinued 
  Operations (excluded above)                    $ 106.0     $  (1.4)    $  128.0
                                                 _______     _______     ________
                                                 _______     _______     ________
<FN>
*  Charged to the reserve for future losses on discontinued products.  (Please see 
   "Large Case Pensions - Discontinued Products" on page 23.)

** Net realized capital losses of $37.4 million for 1993 on assets supporting 
   discontinued products are included in the $42.0 million of capital losses
   included in results of continuing operations above.
</TABLE>

Net realized capital gains from sales in 1995 include gains from 
the sale of debt securities.  Net realized capital losses from 
changes in reserves for mortgage loans and real estate in 1995 and 
1994 declined and reflect improvements in certain segments of the 
commercial real estate markets.  Net realized capital gains 
(losses) from sales in 1993 include a $12 million loss on the sale 
of the U.K. life and investment management operations.

Net realized capital gains in 1995 on assets related to 
Discontinued Operations include $156 million of gains resulting 
from the sale of equity securities primarily due to the company's 
efforts to reduce volatility in its statutory surplus, and 
increase income, and in connection with the agreement to sell the 
property-casualty operations.  Such gains are partially offset by 
a $23 million loss from the write-down of the company's investment 
in a consolidated subsidiary, Aetna Re-Insurance Company (U.K.) 
Ltd., which it intends to sell.  Net realized capital gains 
(losses) on assets related to Discontinued Operations include a 
$14 million gain resulting from the sale of a portion of an 
unconsolidated subsidiary in 1994 and a $27 million gain in 1993 
from the redemption of preferred stock received in connection with 
the sale of American Re-Insurance Company.


<PAGE> 8

Overview (Continued)

Income Taxes 

During 1995, the company moved from a net unrealized capital loss 
position of $1,072 million ($381 million of which related to 
Discontinued Operations) at December 31, 1994 to a net unrealized 
capital gain position of $641 million ($303 million of which 
related to Discontinued Operations) at December 31, 1995, 
primarily due to decreases in interest rates.  As a result, the 
$475 million of valuation allowances related to deferred tax 
assets on these losses at December 31, 1994 (of which $102 million 
related to Discontinued Operations) were reversed, with no impact 
on 1995 net income.  The establishment of the valuation allowances 
described above had no impact on net income for 1994.

Management believes that it is more likely than not that the 
company will realize the benefit of its net deferred tax assets of 
$272 million for continuing operations and $642 million for 
Discontinued Operations.  (Please see Note 10 of Notes to 
Financial Statements.)

Return on Shareholders' Equity

Return on shareholders' equity for the years ended December 31 was 
as follows:

<TABLE>
<CAPTION>
                                                        1995         1994          1993
_______________________________________________________________________________________
<S>                                                     <C>          <C>           <C>

Return on shareholders' equity                           3.9%         7.5%        (5.1)%

Return on shareholders' equity
   excluding additions to environmental
   and asbestos-related claims reserves                 14.8%        10.0%        (3.9)%
</TABLE>


<PAGE> 9

Overview (Continued)

Revenue

Total revenue from continuing operations, excluding net realized 
capital gains and losses, increased 5% in 1995, primarily as a 
result of increased premiums and fees and other income, partially 
offset by a decrease in net investment income.  Premium income 
increased 8% in 1995.  Such increase primarily reflects a movement 
toward higher revenue products in the Aetna Health Plans segment 
and increases in the volume of business sold in the Pacific Rim 
and Latin American markets in the International segment.  Fees and 
other income increased 10%, reflecting an increase in the Aetna 
Health Plans segment primarily due to growth in covered members 
related to the point-of-service product and the Aetna Life 
Insurance & Annuity segment primarily due to an increase in fees 
assessed against policyholders related to growth in assets under 
management.  (Please see "Discontinued Operations - Property-
Casualty Operations" on page 30 for further discussions related to 
revenue.)

Severance and Facilities Charge

In 1993 the company recorded a $200 million after-tax 
($308 million pretax) severance and facilities charge to fourth 
quarter 1993 earnings (of which $96 million after tax and 
$147 million pretax related to Discontinued Operations).  The 
planned actions included the elimination of approximately 4,000 
positions (2,000 of which related to Discontinued Operations).  
The severance and facilities charge also included costs related to 
vacating excess leased office space and costs related to vacating 
and selling an owned property in Hartford, Connecticut.

All of the positions expected to be eliminated had been completed 
by December 31, 1995 and the related severance benefits charged 
against the reserve. The annualized after-tax savings of 
approximately $200 million resulting from these and other cost 
reduction actions (of which $120 million related to Discontinued 
Operations) had been realized as of December 31, 1995.

(Please see Note 4 of Notes to Financial Statements for further 
discussions related to severance and facilities charges.)

The company continues to conduct strategic and financial reviews 
of its continuing operations in order to make such operations more 
competitive.  Such reviews may result in restructuring actions in 
1996 which would be in addition to the severance and facilities 
charges anticipated in connection with the sale of the company's 
property-casualty operations, though the amount of any such 
charges cannot be estimated at this time.  (Please see "Sale of
Property-Casualty Operations" on page 6.)


<PAGE> 10

Aetna Health Plans

<TABLE>
<CAPTION>

Operating Summary (Millions)               1995        1994        1993     
____________________________________________________________________________
<S>                                        <C>         <C>         <C>
Premiums                                   $ 5,949.7   $ 5,611.5   $ 4,700.6
Net investment income                          364.0       351.6       376.3
Fees and other income                        1,312.3     1,197.2     1,039.5
Net realized capital losses                    (10.6)      (21.2)      (10.4)
                                           _________________________________ 
    Total revenue                            7,615.4     7,139.1     6,106.0
                                           _________________________________
Current and future benefits                  5,100.4     4,755.1     3,989.3
Operating expenses                           2,038.4     1,805.4     1,592.6
Amortization of deferred policy
  acquisition costs                             22.2        40.5        29.4
Severance and facilities charge                    -           -        79.8
                                           _________________________________
Income before taxes                            454.4       538.1       414.9
Income taxes                                   168.4       196.4       142.7
                                           _________________________________
Income before cumulative
  effect adjustments                       $   286.0   $   341.7   $   272.2
____________________________________________________________________________
                                           _________________________________
Net realized capital losses, net of tax
  (included above)                         $    (7.1)  $   (13.6)  $    (8.3)
____________________________________________________________________________ 
                                           _________________________________ 

</TABLE>

The Aetna Health Plans ("AHP") segment consists of Health, 
Specialty Health and Group Insurance businesses.

The Health business provides a full spectrum of managed care and 
traditional indemnity plans, providing its members with a choice 
of health plans to meet their individual needs.  Managed care 
products vary with respect to the extent to which the company 
manages health care costs and utilization.  Such products range 
from preferred provider organization (PPO) plans to point-of-
service (POS) and health maintenance organization (HMO) plans.  In 
addition, the company owns and manages physician practices for use 
by its members and other consumers.  The number of health members 
covered at December 31 was approximately:

<TABLE>
<CAPTION>

(Millions)                         1995      1994      1993
___________________________________________________________
<S>                                <C>       <C>       <C>
Health
  HMO                               1.5       1.5       1.4
  POS                               2.3       1.5       0.5
                                    _______________________
    Total Gated Managed Care (1)    3.8       3.0       1.9
  PPO                               4.2       4.0       3.5
                                    _______________________
    Total Managed Care              8.0       7.0       5.4
                                                           
  Traditional Indemnity (2)         4.0       4.8       5.9
                                   ________________________

Total Health                       12.0      11.8      11.3
                                   ________________________
                                   ________________________

<FN>
(1) Gated managed care refers to the role of the primary care physician (i.e., gatekeeper).
    In the HMO and POS products, the physician is selected by the member to coordinate the
    total health care of the member and seeks to ensure that only appropriate and high-
    quality services are provided.

(2) During 1995, AHP redefined its traditional indemnity membership in order to better align
    the components of such membership with its businesses.  Accordingly, AHP "dental-only"
    members of 3.8 million in 1994 and 3.7 million in 1993, previously included in traditional
    indemnity, are now included solely in Specialty Health.
</TABLE>

<PAGE> 11

Aetna Health Plans (Continued)

Membership attributable to a risk contract with the Civilian 
Health and Military Program of the Uniformed Services (Champus), 
of .7 million, .7 million and .2 million members at December 31, 
1995, 1994 and 1993, respectively, is included in managed care 
membership.  Champus has awarded renewal of the contract to 
another provider, although the company will remain the primary 
provider through March 31, 1996.

Specialty Health products include behavioral health, pharmacy and 
dental plans, which provide managed care or indemnity features. 
The number of members covered by Specialty Health products at December
31 was approximately:

<TABLE>
<CAPTION>

(Millions)                  1995 (1)     1994 (1)     1993 (1)
_____________________________________________________________ 
<S>                         <C>          <C>          <C>
Behavioral Health           14.9         15.3         13.3
                            ______________________________
                            ______________________________

Dental                       8.3          8.3          8.6
                            ______________________________
                            ______________________________

Managed Pharmacy             4.2          3.3          2.7
                            ______________________________
                            ______________________________


<FN>

(1)  Many Specialty Health members participate in more than one type of AHP coverage
     and are therefore counted in each.

</TABLE>

The Group Insurance business provides life insurance, disability, 
including managed disability, and long-term care plans.  The 
number of members covered by Group Insurance products at December 
31 was approximately:

<TABLE>
<CAPTION>

(Millions)                  1995 (1)     1994 (1)     1993 (1)
_____________________________________________________________ 
<S>                         <C>          <C>          <C>
Group Life (2)               8.0          7.8          7.7
                             _____________________________
                             _____________________________

Disability                   2.2          2.1          2.1
                             _____________________________
                             _____________________________

Long-Term Care                .1           .1           .1
                             _____________________________
                             _____________________________


<FN>

(1)  Many Group Insurance members participate in more than one type of AHP coverage
     and are therefore counted in each.

(2)  Group life includes members with accident coverages.
</TABLE>


<PAGE> 12

Aetna Health Plans (Continued)

Products and services for AHP's businesses are marketed primarily 
to employers (i.e., plan sponsors) for the benefit of employees 
and their dependents (i.e., members).  Plans may be insured, in 
whole or in part, or benefits may be entirely funded by the plan 
sponsor ("self-funded").  Insured plans generally involve the 
assumption of all or a portion of health care cost and utilization 
risk by the company ("risk plans").  Self-funded plans do not 
involve the assumption of significant risk by the company 
("nonrisk plans") and thus typically generate lower, but more 
consistent, earnings than comparable insured plans.  Stop loss 
arrangements are available to self-funded plan sponsors, which 
limit the risk they retain.

Revenue produced by risk plans is reflected in "premiums" and by 
nonrisk plans is reflected in "fees and other income."  Benefit 
expenses provided under risk plans are reflected in current and 
future benefits.  Administrative expenses are associated with both 
risk and nonrisk plans and are reflected in operating expenses.

The number of Health members at December 31, 1995 participating in 
risk versus nonrisk plans was as follows:

<TABLE>
<CAPTION>

(Millions)                     Risk         Nonrisk      Total
______________________________________________________________
<S>                            <C>          <C>          <C>
Health
  HMO                          1.2           .3          1.5
  POS                           .4          1.9          2.3
                               _____________________________
  Total Gated Managed Care     1.6          2.2          3.8
 PPO                           1.4          2.8          4.2
                               _____________________________
  Total Managed Care           3.0          5.0          8.0
 Traditional Indemnity          .7          3.3          4.0
                               _____________________________
Total Health                   3.7          8.3         12.0
                               _____________________________
                               _____________________________

</TABLE>

At December 31, 1995, the majority of AHP's Specialty Health 
members participated in nonrisk plans, while the majority of AHP's 
Group Insurance members were covered by risk plans.

The risk/nonrisk composition of AHP's 1995 total membership is 
generally consistent with the composition of 1994 and 1993 total 
membership.


<PAGE> 13

Aetna Health Plans (Continued)

AHP's adjusted earnings (after tax) follow:

<TABLE>
<CAPTION>

(Millions)                                       1995        1994        1993   
________________________________________________________________________________
<S>                                              <C>         <C>         <C>
Income before cumulative effect adjustments      $ 286.0     $ 341.7     $ 272.2

Less:
    Net realized capital losses                     (7.1)      (13.6)       (8.3)

    Severance and facilities charge                    -           -       (51.9)
                                                 _______     _______     _______ 

Adjusted earnings                                $ 293.1     $ 355.3     $ 332.4
                                                 _______     _______     _______
                                                 _______     _______     _______
</TABLE>

AHP's adjusted earnings decreased $62 million in 1995, compared 
with an increase of $23 million in 1994.  The lower earnings in 
1995 are primarily due to the expenses associated with an increase in
managed care investments and a deterioration of medical trend in the 
first half of the year on indemnity and PPO health products, partially 
offset by increased earnings from HMO operations and improved expense 
management in the Specialty Health and Group Insurance businesses.  
HMO earnings were $41 million, $30 million and $11 million in 
1995, 1994 and 1993, respectively, and the related medical loss 
ratios were 84.3%, 84.6% and 84.6%, respectively.  The increase in 
HMO earnings is due to growth of membership in risk plans of over 
80,000 members in 1995 and 120,000 members in 1994 and to stronger 
management of medical costs in both years.  1994 adjusted earnings 
reflected improved earnings in the Health business which resulted 
from an increase in premiums and fees, offset in part by an 
increase in expenses related to investments in managed care.  
Group Insurance earnings represented approximately one-third of 
AHP's earnings for 1995, and were comparable to the earnings in 
1994 and 1993.

Revenue for the Health and Specialty Health businesses increased 
approximately $540 million or 10% in 1995 and increased 
approximately $1 billion or 23% in 1994.  The 1995 and 1994 
increases were primarily due to the shift in membership to managed 
care products.  Group Insurance represented approximately 18%, 20% 
and 24% of AHP's revenue for 1995, 1994 and 1993, respectively.

Health and Specialty Health benefit expense increased from 1994 to 
1995 due to higher medical costs in the nongated indemnity and PPO 
risk products, which was partially offset by reduced membership in 
the indemnity product.  HMO benefit expense also increased due to 
growth in membership, although it has improved on a per member 
basis.  In 1994, the Health and Specialty Health benefit expense 
increased evenly with revenue.

Operating expenses increased significantly for the Health and 
Specialty Health businesses in 1995 and 1994 due to planned 
investments in managed care-related systems and processes, and in 
primary care physician practices, which have grown from 21 
practices in six cities in 1994 to 62 practices in eight cities in 
1995.  In addition, the migration of members from indemnity to the 
more resource intensive POS product contributed to the increase in 
operating expenses in both 1995 and 1994.

<PAGE> 14

Aetna Health Plans (Continued)

Outlook

Management expects that AHP will continue to be a primary source 
of earnings to the company.  With the market shift from 
traditional indemnity plans toward managed care, the continued 
profitability of AHP is dependent upon growing its managed care 
business while effectively managing the health care costs and 
operating expenses of that business, as well as the quality of 
services provided.  Factors that may affect AHP's ability to 
control these costs and expenses include competition, changes in 
health care practices, inflation, contracts with providers, 
changing medical technologies, government imposed surcharges, 
taxes or assessments, and changes in federal or state laws.

Legislative efforts to change the health insurance system have 
received increased attention in recent years at both the state and 
national levels, including various proposals to reform the federal 
Medicare program.  AHP actively supports proposals designed to 
enhance managed care and expand access to health care coverage 
through private sector competition.  Management is not able to 
predict the outcome of state and federal legislative efforts, or 
the effect any additional legislation, if adopted, would have on 
the company.

AHP will continue to invest in its managed care infrastructure in 
its effort to effectively manage health care costs and operating 
expenses, and the quality of services provided.  The company is 
looking for opportunities to make managed care investments or 
acquisitions to further strengthen the company's overall market 
position.  The Specialty Health and Group Insurance businesses 
will concentrate on increased cross-selling of their products to 
current AHP members, as well as marketing to non-AHP customers.



<PAGE> 15

Aetna Life Insurance & Annuity

<TABLE>
<CAPTION>

Operating Summary (Millions)               1995         1994         1993      
_______________________________________________________________________________
<S>                                        <C>          <C>          <C>
Premiums                                   $    178.3   $    168.3   $    125.7
Net investment income                         1,044.1        958.7        962.4
Fees and other income                           359.1        316.0        294.4
Net realized capital gains (losses)              42.7         (5.6)        12.8
                                           ____________________________________
    Total revenue                             1,624.2      1,437.4      1,395.3
                                           ____________________________________
Current and future benefits                     979.5        916.1        882.9
Operating expenses                              305.8        258.9        287.7
Amortization of deferred policy
  acquisition costs                              44.1         27.4         20.6
Severance and facilities charge                     -            -         30.8
                                           ____________________________________
Income before taxes                             294.8        235.0        173.3
Income taxes                                     96.8         75.9         61.9
                                           ____________________________________
Income before cumulative
  effect adjustments                       $    198.0   $    159.1   $    111.4
_______________________________________________________________________________
                                           ____________________________________
Net realized capital gains (losses),
  net of tax (included above)              $     27.0   $     (3.8)  $      6.1
_______________________________________________________________________________
                                           ____________________________________
Deposits not included in premiums above:
  Annuities:
    Fully guaranteed                       $    415.7   $    249.0   $    263.7
    Experience rated                            928.6      1,058.2        970.5
    Non-guaranteed                            2,019.4      1,340.4      1,040.1
                                           ____________________________________
      Total annuities                         3,363.7      2,647.6      2,274.3
  Individual Life                               539.1        318.7        268.7
                                           ____________________________________
      Total                                $  3,902.8   $  2,966.3   $  2,543.0
_______________________________________________________________________________
                                           ____________________________________
Assets under management:(1)(2)
    Fully guaranteed                       $  3,408.4   $  2,626.7   $  2,428.1
    Experience rated                         10,999.9      9,272.0      9,241.5
    Non-guaranteed                           11,522.9      8,064.6      7,111.0
                                           ____________________________________
      Total                                $ 25,931.2   $ 19,963.3   $ 18,780.6
_______________________________________________________________________________
                                           ____________________________________
<FN>

 (1) Included above are net unrealized capital gains (losses) of approximately 
     $800 million, $(390) million and $750 million at December 31, 1995, 1994 and 
     1993, respectively.

 (2) Includes $2,604.2 million, $902.9 million and $369.0 million at December 31, 1995,
     1994 and 1993, respectively, related to assets held and managed by unaffiliated
     mutual funds.

</TABLE>

The Aetna Life Insurance & Annuity segment ("ALIAC") markets and 
services two principal types of products:  (1) financial services 
and (2) life insurance.

The financial services products include individual and group 
annuity contracts which offer a variety of funding and 
distribution options for personal and employer-sponsored 
retirement plans that qualify under IRC Sections 401, 403, 408 and 
457, and individual and group nonqualified annuity contracts. 
These contracts may be immediate or deferred and are offered 
primarily to individuals, pension plans, small businesses and 
employer-sponsored groups in the health care, government, 
education (collectively "not-for-profit" organizations) and 
corporate markets.  Financial services also include pension plan 
administrative services.

The life insurance products include universal life, variable 
universal life, interest-sensitive whole life and term insurance. 
These products are offered primarily to individuals, small 
businesses, employer-sponsored groups and executives of Fortune 
2000 companies.


<PAGE> 16

Aetna Life Insurance & Annuity (Continued)

The annuity and life insurance contracts marketed by ALIAC include 
fully guaranteed, experience rated and non-guaranteed investment 
options and are written primarily by Aetna Life Insurance and 
Annuity Company.  Fully guaranteed options provide guarantees on 
investment return, maturity values, and if applicable, benefit 
payments.  The experience rated options require the customer to 
assume investment (including realized capital gains and losses) 
and other risks subject, among other things, to certain minimum 
guarantees.  The effect of such realized gains and losses does not 
impact the company's results. The non-guaranteed investment 
options provide for full assumption by the customer of investment 
results. Assets supporting non-guaranteed options are held in 
separate accounts that invest in Aetna and unaffiliated mutual 
funds (which are included in assets under management) and are 
managed by the company for a fee.  Separate account investment 
income and realized capital gains and losses are not reflected in 
the company's consolidated results of operations.  Aetna retail 
mutual funds also are available to individual and institutional 
investors outside of the ALIAC retirement products.

ALIAC's adjusted earnings (after tax) follow:

<TABLE>
<CAPTION>
(Millions)                                       1995        1994        1993   
________________________________________________________________________________
<S>                                              <C>         <C>         <C>
Income before cumulative effect adjustments      $ 198.0     $ 159.1     $ 111.4
Less:
    Net realized capital gains (losses)             27.0        (3.8)        6.1

    Severance and facilities charge                    -           -       (20.0)
                                                 _______     _______     _______ 

Adjusted earnings                                $ 171.0     $ 162.9     $ 125.3
                                                 _______     _______     _______
                                                 _______     _______     _______
</TABLE>

ALIAC's adjusted earnings increased $8 million in 1995, following 
a $38 million increase in 1994.  Results in 1995 reflected 
improved earnings in the financial services products, while 
earnings in the life insurance products were level with the prior 
year.  The improvement in earnings related to the financial 
services products reflected an increase in fees assessed against 
policyholders and increased net investment income related to the 
growth in assets under management which were partially offset by 
an increase in operating expenses.  This increase in operating 
expenses primarily reflects continued business growth.  The 
improvement in ALIAC's 1994 adjusted earnings reflected improved 
earnings in both the life insurance and financial services 
products primarily as a result of a decrease in operating expenses 
reflecting savings associated with prior restructurings in ALIAC's 
life insurance and pension plan administrative service businesses.  
The 1994 improvement also reflected an increase in fees assessed 
against policyholders, primarily due to an increase in the volume 
of business in force for certain universal life and annuity 
contracts.

<PAGE> 17

Aetna Life Insurance & Annuity (Continued)

Premiums relate to term life, whole life and annuity products 
containing life contingencies.  Premiums increased by $10 million 
in 1995 and by $43 million in 1994.  The 1995 and 1994 increases 
resulted primarily from increases in immediate annuity sales.

Deposits relate to annuity contracts not involving life 
contingencies and universal life contracts.  Deposits increased 
32% in 1995, which included the assumption of a $471 million 
variable annuity and universal life block of business.  The 
increase in 1994 reflected the $215 million assumption of a block 
of primarily individual annuity business and strong universal life 
sales.

Assets under management increased by 30% during 1995 primarily as 
a result of continued business growth and overall improvement in 
the stock and bond markets.

ALIAC's contracts typically impose surrender fees which decline 
over the duration of the contract.  Assets held under experience 
rated general account options have transfer and withdrawal 
limitations.  Withdrawals from the fully guaranteed accumulation 
options prior to maturity include an adjustment intended to 
reflect the estimated fair value of the assets supporting the 
contract at the time of withdrawal.  Withdrawals from non-
guaranteed options are based on the actual market value of the 
assets in the separate account.  Approximately 91% and 90% of 
assets under management at December 31, 1995 and 1994, 
respectively, allowed for contractholder withdrawal, 63% and 57% 
of which, respectively, are subject to market value adjustments or 
deferred surrender charges at December 31, 1995.

Outlook

ALIAC's sales of life insurance and tax-qualified annuities are 
expected to continue to be strong in 1996.  Sales of nonqualified 
products, a primary focus for 1995, are expected to significantly 
exceed 1995 levels as relationships formed with broker/dealers and 
banks in 1995 build sales momentum.  ALIAC intends to expand its 
retirement planning capabilities.  The company expects to evaluate 
opportunities for growth of its financial services businesses and 
strengthen their competitive position.  Management expects that 
ALIAC will continue to be a significant source of earnings to the 
company.


<PAGE> 18

International

<TABLE>
<CAPTION>
Operating Summary (Millions)                1995        1994        1993    
____________________________________________________________________________
<S>                                         <C>         <C>         <C>
Premiums                                    $1,038.5    $  887.1    $  909.5
Net investment income                          308.7       308.4       311.6
Fees and other income                          115.0        97.0        83.4
Net realized capital gains (losses)             (2.4)        4.5       (25.2)
                                            ________________________________ 
  Total revenue                              1,459.8     1,297.0     1,279.3
                                            ________________________________
Current and future benefits                    911.2       782.7       860.1
Operating expenses                             350.5       349.8       354.3
Amortization of deferred policy
  acquisition costs                             70.8        65.7        51.7
Severance and facilities charge                    -           -        11.0
                                            ________________________________
Income before taxes                            127.3        98.8         2.2
Income taxes (benefits)                         40.7        27.6       (52.8)
                                            ________________________________ 
Income before cumulative
  effect adjustments                        $   86.6    $   71.2     $  55.0
____________________________________________________________________________
                                            ________________________________
Net realized capital gains (losses),
  net of tax (included above)               $   (2.1)   $    2.1     $ (11.6)
____________________________________________________________________________ 
                                            ________________________________ 
</TABLE>

The International segment, through subsidiaries and joint venture 
operations, sells primarily life insurance and financial services 
products in non-U.S. markets including Canada, Mexico, Taiwan, 
Chile, Malaysia, Hong Kong, New Zealand, Peru, Argentina and 
Indonesia.

International's adjusted earnings (after tax) follow:

<TABLE>
<CAPTION>
(Millions)                                       1995        1994        1993   
________________________________________________________________________________
<S>                                              <C>         <C>         <C>
Income before cumulative effect adjustments      $  86.6     $  71.2     $  55.0

Less:
    Net realized capital gains (losses)             (2.1)        2.1       (11.6)

    Severance and facilities charge                    -           -        (7.1)
                                                 _______     _______     _______ 

Adjusted earnings                                $  88.7     $  69.1     $  73.7
                                                 _______     _______     _______
                                                 _______     _______     _______
</TABLE>

International's adjusted earnings increased $20 million in 1995, 
following a $5 million decrease in 1994.  Results in 1995 and 1994 
primarily reflected continued improvement in the Pacific Rim 
operations and increased investment income from Mexico.  Results 
in 1994 also reflected earnings from the company's increased 
investment (from 30% ownership in 1993 to 45% ownership in 1994) 
in its Mexican insurance operation.  1993 adjusted earnings 
included $37 million of tax benefits from prior year operating 
losses related to the sale of the U.K. life and investment 
management operations.


<PAGE> 19

International (Continued)

During 1994, the company changed its accounting for an affiliate 
from the consolidated basis of accounting to the equity basis of 
accounting.  Prior to the change, the company recognized revenue 
of $98 million and $173 million in 1994 and 1993, respectively, 
and benefits and expenses of $98 million and $180 million in 1994 
and 1993, respectively, from the affiliate.  During the first 
quarter of 1995, the company sold its interest in the affiliate at 
book value.

Premiums in 1995 were 17% higher than in 1994, following a 2% 
decrease in 1994 premiums as compared with 1993.  Excluding the 
change in accounting for the affiliate discussed above, premiums 
increased 29% and 5% in 1995 and 1994, respectively, primarily due 
to increases in the volume of business sold in the Pacific Rim and 
Latin American markets.

Outlook

International's strategy is to invest in areas outside the U.S. 
that have the potential for attractive returns, with emphasis on 
the emerging insurance and financial services markets.  Recently, 
International has entered new markets in Argentina and Indonesia, 
and has obtained a license to sell life and health insurance 
products in the Philippines.

Approximately 28% of International's 1995 adjusted earnings are 
derived from the company's Mexican affiliate.  The current 
difficult economic environment in Mexico is expected to limit the 
ability of this affiliate to increase its earnings contribution.

Conducting business and investing in international markets pose 
unique risks which vary from country to country.  Such risks 
include, but are not limited to, political developments, including 
tax changes, nationalization and changes in regulatory policy, 
currency restrictions, currency fluctuations, as well as the 
consequence of hostilities and unrest.

Management believes that its continued focus on entering new 
markets where suitable opportunities exist and development of 
existing operations will help to reduce the exposure to the above-
indicated risks through further diversification of its operations, 
and that International will be a meaningful contributor to overall 
company results.


<PAGE> 20

Large Case Pensions

<TABLE>
<CAPTION>
Operating Summary (Millions)               1995         1994         1993      
_______________________________________________________________________________
<S>                                        <C>          <C>          <C>
Premiums                                   $    264.9   $    234.4   $    185.9
Net investment income                         1,850.6      2,017.4      2,327.7
Fees and other income                           135.3        128.4         95.3
Net realized capital gains (losses)              18.1        (25.0)       (42.9)
                                           ____________________________________ 
    Total revenue                             2,268.9      2,355.2      2,566.0
                                           ____________________________________
Current and future benefits                   2,036.1      2,175.9      2,428.1
Operating expenses                              100.1         98.2        120.2
Loss on discontinuance of products                  -            -      1,270.0
Severance and facilities charge                     -            -         21.9
                                           ____________________________________
Income (Loss) before taxes                      132.7         81.1     (1,274.2)
Income taxes (benefits)                          43.5         26.7       (451.9)
                                           ____________________________________ 
Income (Loss) before cumulative
  effect adjustments                       $     89.2   $     54.4   $   (822.3)
_______________________________________________________________________________ 
                                           ____________________________________ 
Net realized capital gains (losses),
  net of tax (included above)              $     11.0   $    (17.0)  $    (30.5)
_______________________________________________________________________________ 
                                           ____________________________________ 
Net loss attributable to discontinued
  products, net of tax                     $        *   $         *   $   (915.4)
_________________________________________________________________________________ 
                                           ______________________________________ 
Deposits not included in premiums above:
    Fully guaranteed                       $     31.5   $    212.3   $    797.7
    Experience rated                            719.9        630.8        677.4
    Non-guaranteed                              872.3      1,072.5      1,316.5
                                           ____________________________________
      Total                                $  1,623.7   $  1,915.6   $  2,791.6
_______________________________________________________________________________
                                           ____________________________________
Assets under management: (1)
    Fully guaranteed                       $ 10,324.6   $ 11,905.3   $ 14,695.1
    Experience rated                         17,446.4     15,944.9     17,020.6
    Non-guaranteed                           18,634.1     18,491.9     21,050.2
                                           ____________________________________
      Total                                $ 46,405.1   $ 46,342.1   $ 52,765.9
_______________________________________________________________________________
                                           ____________________________________
<FN>

(1) Included above are net unrealized capital gains (losses) of approximately 
    $790 million, $(540) million and $750 million at December 31, 1995, 1994 and 
    1993, respectively.

*   Results of discontinued products in 1995 and 1994 (losses of $26.2 million and 
    $172.1 million, respectively) were charged against the reserve for anticipated 
    future losses and did not impact net income of the segment.  (Please see 
    "Discontinued Products" on page 23.)
</TABLE>

The Large Case Pensions segment manages a variety of retirement 
and other savings products (including pension and annuity 
products) and offers investment management and advisory services 
to nonpension customers.  Large case pension products are offered 
primarily by Aetna Life Insurance Company and certain of its 
registered investment advisor affiliates, and generally are 
tailored for defined benefit and defined contribution pension 
plans that qualify under Internal Revenue Code ("IRC") Section 401 
for tax-preferred treatment.  Contracts provide fully guaranteed, 
partially guaranteed (experience rated) and non-guaranteed 
investment options.  As discussed below, fully guaranteed large 
case pension products are no longer offered by the company.  
(Please see "Discontinued Products" on page 23.)


<PAGE> 21

Large Case Pensions (Continued)

Large Case Pensions' adjusted earnings (after tax) follow:

<TABLE>
<CAPTION>
(Millions)                                       1995        1994        1993   
________________________________________________________________________________
<S>                                              <C>         <C>         <C>
Income (Loss) before cumulative effect
  adjustments                                    $  89.2     $  54.4     $(822.3)

Less:
    Net realized capital gains (losses)             11.0       (17.0)      (30.5)

    Severance and facilities charge                    -           -       (14.2)

    Loss on discontinuance of products                 -           -      (825.0)
                                                 _______     _______     _______ 

Adjusted earnings                                $  78.2     $  71.4     $  47.4
                                                 _______     _______     _______
                                                 _______     _______     _______
</TABLE>

Large Case Pensions' adjusted earnings increased $7 million in 
1995, following a $24 million increase in 1994.  1995 and 1994 
adjusted earnings reflect net benefits from the absence of losses 
from discontinued fully guaranteed products.  1995 adjusted 
earnings also reflected an increase in fees and other income and 
in net interest margins.  Such favorable results were partially 
offset by the effect of reduced net investment income as a result 
of returning capital to the parent company and lower interest 
rates. 1994 adjusted earnings were adversely affected by the 
decline in the level of general account assets under management.

The increase in 1995 premiums primarily related to additional 
premiums from existing contractholders and did not have a material 
effect on results.

Experience rated products are supported by either general account 
or separate account assets.  Such products supported by general 
account assets have declined in recent years, initially due to 
customer concerns about the company's ratings, as well as the life 
insurance industry's financial strength, and the company's 
investment concentrations in mortgage loans and real estate.  More 
recently, the decline has slowed, and management believes that 
such decline is more attributable to competitive pressures and a 
shift to separate account products.  Experience rated products 
supported by separate accounts have increased to $4.6 billion at 
December 31, 1995 from $3.3 billion at December 31, 1994.

General account assets supporting experience rated products may be 
subject to participant and/or contractholder withdrawal.  At 
December 31, 1995, approximately $2.7 billion of such contracts 
allowed for unscheduled contractholder withdrawals, subject to 
timing restrictions and formula-based market value adjustments.

Further, at December 31, 1995, approximately $4.0 billion of the 
experience rated pension contracts supported by general account 
assets could be withdrawn or transferred to other plan investment 
options at the direction of plan participants without market value 
adjustment.  Participant withdrawals are generally subject to 
significant tax and plan constraints.


<PAGE> 22

Large Case Pensions (Continued)

Experience rated contractholder and participant withdrawals and 
transfers were as follows (excluding contractholder transfers to 
other company products) for the years ended December 31:

<TABLE>
<CAPTION>
(Millions)                                         1995        1994        1993    
___________________________________________________________________________________
<S>                                                <C>         <C>         <C>
Scheduled contract maturities
  and benefit payments (1)                         $1,012.3    $1,000.1    $1,049.8
Contractholder withdrawals other than scheduled
  contract maturities and benefit payments            381.3       590.6       893.2
Participant withdrawals                               182.2       183.6       222.5

<FN>
(1) Includes payments made upon contract maturity and other amounts distributed in
    accordance with contract schedules.
</TABLE>

Outlook

The company's ability to retain and grow its continuing large case 
pension business is affected by consumer confidence in both the 
company and the life insurance industry.  Consumer confidence may 
be influenced by such factors as reduced insurance company ratings 
(please see "Liquidity and Capital Resources" on page 65) and 
perceived financial difficulties in the industry.  Management 
believes that a continuation of the substantial competitive 
pressures in the large case pension market is likely to cause 
assets under management to continue to decline.

Although the company is seeing some improvement in certain 
segments of the commercial real estate market, capital losses on 
experience rated pension business may increase in the future if 
the company's capacity to pass through future investment losses to 
experience rated contractholders is reduced.  Changes in customer 
withdrawal activity, interest rate changes, future losses on 
investments and experience rated contract modifications, if any, 
could further reduce the company's capacity to pass through future 
investment losses to contractholders (or investment losses 
currently considered allocable to contractholders) either as a 
result of triggering minimum guarantee provisions or through 
exercise of management judgment, thereby adversely affecting the 
company's future results.

Earnings for Large Case Pensions are expected to decline as 
general account assets under management decline. A slowing in the 
earnings decline is dependent upon new separate account deposits, 
the recapture of general account maturities and withdrawals, 
higher interest rates and a continued reduction in operating 
costs.  As assets decline, management expects to continue to 
redeploy capital to other businesses.

The company is exploring sale or other alternatives for certain 
portions of its large case pension investment management and 
advisory business conducted through its subsidiary, Aeltus 
Investment Management.  Such actions have included the signing, in 
1996, of a letter of intent by the company to sell Aetna Realty 
Investors ("ARI") to TA Associates.  ARI contributed $6 million to 
Large Case Pensions' net income in 1995 as compared to $5 million 
in 1994.


<PAGE> 23

Large Case Pensions (Continued)

Discontinued Products

In January 1994, the company announced its decision to discontinue 
the sale of its fully guaranteed large case pension products.  As 
a result of this decision, the company recognized an after-tax 
loss on discontinuance of $825 million in 1993 and established a 
reserve of $1,270 million at December 31, 1993 for anticipated 
future losses expected on the runoff of these products.  The 1993 
loss on discontinuance was composed of $390 million for guaranteed 
investment contracts ("GICs") and $435 million for single-premium 
annuities ("SPAs").

The reserve for anticipated future losses on discontinued products 
was established based on the present value of the difference 
between (a) the expected cash flows from the assets supporting 
discontinued products, and (b) the cash flows expected to be 
required to meet the obligations of the outstanding contracts as 
of December 31, 1993. To the extent that actual future losses 
differ from anticipated future losses, the company's results of 
operations would be affected.  Management believes the reserve for 
anticipated losses at December 31, 1995 is adequate to provide for 
future losses associated with the guaranteed product liabilities. 
Results of discontinued products for 1995 and 1994, as shown in 
the following tables, were charged to the reserve and did not 
affect the company's results of operations.  Future losses 
(including capital losses) for each product will be charged to the 
respective reserve at the time such losses are realized.

At the time of discontinuance, a receivable from continuing 
products was established for each discontinued product equivalent 
to the net present value of the anticipated cash flow shortfalls.  
The receivables, on which interest is accrued at the discount 
rates used to calculate the loss on discontinuance, will be 
funded, net of taxes on the accrued interest, from invested assets 
supporting Large Case Pensions.  The offsetting payable, on which 
interest is similarly accrued, was established in continuing 
products. The interest on such payable generally offsets the 
investment income on the assets available to fund the shortfall.  
At December 31, 1995, for GICs and SPAs, the receivables from 
continuing operations, net of the related deferred taxes payable 
of $14 million and $21 million, respectively, on the accrued 
interest income, were $416 million and $473 million, respectively.  
At December 31, 1994, for GICs and SPAs, the receivables from 
continuing operations, net of the related deferred taxes payable 
of $7 million and $10 million, respectively, on the accrued 
interest income, were $403 million and $453 million, respectively.  
As of December 31, 1995 no funding had taken place.


<PAGE> 24

Large Case Pensions (Continued)

Results of discontinued products for years ended December 31 were 
as follows:

<TABLE>
<CAPTION>
(Millions)                                                 1995               
_____________________________________________________________________________ 
                                             GICs        SPAs        Total    
                                             ____        ____        ______   
<S>                                          <C>         <C>         <C>      
Interest margin                              $  (61.1)   $    2.5    $  (58.6)
Net realized capital gains (losses)             (38.8)       30.2        (8.6)
Interest earned on receivable from
  continuing operations                          13.2        19.8        33.0
Other, net                                        3.9         4.1         8.0
                                             ________    ________     _______
Results of discontinued products,
  after tax                                  $  (82.8)   $   56.6    $  (26.2)
                                             ________    ________    ________ 
                                             ________    ________    ________ 
Results of discontinued products, pretax     $ (124.2)   $   86.0    $  (38.2)
                                             ________    ________    ________ 
                                             ________    ________    ________ 
Net realized capital gains (losses)
   from sales of bonds, after tax,
   included above                            $   (1.8)   $   41.7    $   39.9
                                             ________    ________    ________
                                             ________    ________    ________


                                                           1994               
                                             ________________________________ 
                                             GICs        SPAs        Total    
                                             ____        ____        ______   
                                             <C>         <C>         <C>      
Negative interest margin                     $  (86.1)   $    (.7)   $  (86.8)
Net realized capital losses                     (97.6)      (38.2)     (135.8)
Interest earned on receivable from
  continuing operations                          12.6        18.3        30.9
Other, net                                        6.5        13.1        19.6
                                             ________    ________     _______
Results of discontinued products,
  after tax                                  $ (164.6)   $   (7.5)   $ (172.1)
                                             ________    ________    ________ 
                                             ________    ________    ________ 
Results of discontinued products, pretax     $ (254.4)   $  (18.6)   $ (273.0)
                                             ________    ________    ________ 
                                             ________    ________    ________ 
Net realized capital losses
   from sales of bonds, after tax,
   included above                            $  (35.5)   $  (15.7)   $  (51.2)
                                             ________    ________    ________ 
                                             ________    ________    ________ 


                                               1993   
                                             ________ 
                                             Total    
                                             ______   
                                             <C>   
Negative interest margin                     $  (87.9) 
Net realized capital losses                     (37.4) 
Nonrecurring gains on futures contracts          18.8
Other, net                                       16.1  
                                             ________  
Results of discontinued products,
  after tax                                  $  (90.4) 
                                             ________  
                                             ________  
Results of discontinued products, pretax     $ (137.8) 
                                             ________  
                                             ________  
</TABLE>

The interest margin for the discontinued products represents the 
difference between the interest earned on the invested assets 
supporting fully guaranteed large case pension contracts and the 
interest credited to the holders of such contracts.  The negative 
interest margins for the GIC products for years ended December 31, 
1995 and 1994 include a loss (pretax) of $50 million and 
$4 million, respectively, due to the early retirement of 
approximately $730 million and $630 million of contract 
liabilities in 1995 and 1994, respectively.  These losses are 
expected to reduce the level of negative interest margins in 
future periods.

The company periodically reviews its liquidity needs related to 
meeting contract liabilities for both GICs and SPAs.  The early 
retirement of GICs in 1995 and 1994, as well as potential 
additional such retirements in the future, may require the company 
to consider the need for such liquidity resources as borrowings 
between GICs and SPAs or from continuing operations, as well as 
funding of the receivables from continuing operations.

<PAGE> 25

Large Case Pensions (Continued)

The activity in the reserve for anticipated future losses on 
discontinued products for the years ended December 31, 1995 and 
1994 was as follows (pretax):

<TABLE>
<CAPTION>

(Millions)                         GICs        SPAs        Total   
___________________________________________________________________
<S>                                <C>         <C>         <C>

Reserve at December 31, 1993       $  600.0    $  670.0    $1,270.0
Results of discontinued products     (254.4)      (18.6)     (273.0)
                                   ________    ________    ________ 
Reserve at December 31, 1994          345.6       651.4       997.0
Results of discontinued products     (124.2)       86.0       (38.2)
                                   ________    ________    ________ 
Reserve at December 31, 1995       $  221.4    $  737.4    $  958.8
                                   ________    ________    ________
                                   ________    ________    ________
</TABLE>

Discontinued fully guaranteed products provide guarantees on 
investment return, maturity values, and if applicable, benefit 
payments.  The interest credited on these contracts during 1995 
ranged from 3.0% to 17.7% with an average rate of 8.9% (unchanged 
from 1994).  For the contracts remaining at December 31, 1995, the 
average credited rate was 8.6%.  None of these contracts allow for 
contractholder withdrawal, except in extraordinary circumstances.

Distributions on GICs and SPAs for the years ended December 31 
were as follows:

<TABLE>
<CAPTION>
(Millions)                                       1995               
___________________________________________________________________ 
                                    GICs       SPAs       Total    
                                    ____       ____       _____    
<S>                                 <C>        <C>        <C>      
Scheduled contract maturities,
 GIC settlements and benefit
 payments (1)                       $2,685.6   $  522.9   $3,208.5 

Participant directed withdrawals        92.8          -       92.8 


                                                1994                 1993     
                                    ______________________________   ________ 
                                    GICs       SPAs       Total      Total   
                                    ____       ____       _____      _____   
                                    <C>        <C>        <C>        <C>
Scheduled contract maturities, 
 GIC settlements and benefit
 payments (1)                       $2,340.3   $  531.6   $2,871.9   $2,672.2

Participant directed withdrawals       198.5         -       198.5      232.2
<FN>

(1)  Includes payments made upon contract maturity, early settlement of approximately
     $730 million and $630 million of GIC liabilities in 1995 and 1994, respectively, 
     and other amounts distributed in accordance with contract schedules.
</TABLE>

Cash required to meet the above payments was provided by earnings 
on, sales of (including a securitization of mortgage loans), and 
scheduled payments on invested assets.


<PAGE> 26

Large Case Pensions (Continued)

At December 31, 1995, contractholder liabilities were $5.1 billion 
and $4.9 billion for GICs and SPAs, respectively.  Scheduled 
maturities, future benefit payments, and other expected payments 
of GICs and SPAs, including future interest, were as follows (in 
millions):

<TABLE>
<CAPTION>
                                   GICs            SPAs    
                                   ________        ________
<S>           <C>                  <C>             <C>
                    1996           $1,962.5        $  520.9
                    1997            1,276.5           513.7
                    1998              967.8           507.4
                    1999              770.3           501.4
                    2000              437.9           495.3
               2001-2005              605.0         2,388.0
               2006-2010               15.2         2,185.3
               2011-2015                2.5         1,880.9
               2016-2020                 .6         1,503.7
              Thereafter                  -         2,807.6
</TABLE>

Please see Note 3 of Notes to Financial Statements and "General 
Account Investments" on pages 42 through 60 for additional 
discussions related to discontinued products.


<PAGE> 27

Corporate

<TABLE>
<CAPTION>

Operating Summary (Millions, after tax)     1995         1994         1993      
________________________________________________________________________________

<S>                                         <C>          <C>          <C>
Interest expense                            $     70.4   $     60.5   $     44.7
Other expense, net                          $    115.5   $    156.5   $    173.9
</TABLE>

The Corporate segment includes interest expense and other net 
corporate expenses which are not directly related to the company's 
business segments.  "Other net corporate expense" includes items 
such as corporate staff areas, advertising and contributions, 
partially offset by net investment income.

The 1995 and 1994 increase in interest expense resulted primarily 
from the issuance by a subsidiary of 9 1/2% cumulative monthly 
income preferred securities in November 1994.  Other expense for 
1993 included after-tax severance and facilities charges of 
$11 million.  Other expense also included after-tax realized 
capital gains of $1 million in 1995, after-tax realized capital 
losses of $9 million in 1994 and after-tax realized capital gains 
of $2 million in 1993.  Excluding the 1993 severance and 
facilities charge and realized capital gains and losses in all 
three years, the decrease in other expenses in 1995 and 1994 
resulted from a reduction of corporate staff area expenses as a 
result of previous restructurings.

In connection with the sale of the company's property-casualty 
operations, Travelers will sublease the space currently occupied 
by the company in the CityPlace office facility in Hartford for 
eight years at current market rates.  The company expects to take 
a charge of approximately $190 million (after tax).  Such charge 
represents the present value of the difference between rent 
required to be paid by the company under the master lease and 
future rentals expected to be received by the company.  The 
company also anticipates taking other restructuring charges in 
1996 due to actions expected to be taken to reduce the level of 
corporate expenses and other costs previously absorbed by the 
property-casualty operations.


<PAGE> 28

Discontinued Operations - Property-Casualty Operations

<TABLE>
<CAPTION>
Operating Summary (Millions)                     1995         1994         1993      
_____________________________________________________________________________________
<S>                                              <C>          <C>          <C>
Premiums                                         $  4,118.9   $  4,390.8   $  4,653.2
Net investment income                                 901.7        832.1        952.4
Fees and other income                                  82.0        115.6        144.3
Net realized capital gains                            155.6           .4        178.0
                                                 ____________________________________
  Total revenue                                     5,258.2      5,338.9      5,927.9
                                                 ____________________________________
Current and future benefits                         4,232.5      3,746.8      4,214.7
Operating expenses                                    787.3        914.1      1,025.4
Amortization of deferred policy
  acquisition costs                                   622.7        647.2        646.2
Severance and facilities charge                           -            -        147.3
                                                 ____________________________________
Income (Loss) before taxes                           (384.3)        30.8       (105.7)
Income tax benefits(1)                               (162.1)       (27.3)      (119.7)
                                                 ____________________________________ 
Income (Loss) before cumulative
                               
  effect adjustments                             $   (222.2)  $     58.1   $     14.0
_____________________________________________________________________________________
                                                 ____________________________________
Cumulative effect adjustments, net of tax        $        -   $        -   $    276.3
_____________________________________________________________________________________
                                                 ____________________________________
Net realized capital gains (losses), net of tax
  (included above)                               $    106.0   $     (1.4)  $    128.0
_____________________________________________________________________________________
                                                 ____________________________________
Catastrophe losses, net of tax
  (included above)                               $     65.1   $    189.6   $     85.0
_____________________________________________________________________________________
                                                 ____________________________________
Statutory combined ratio                              136.7%       123.3%       125.2%
_____________________________________________________________________________________ 
                                                 ____________________________________ 
Statutory combined ratio (2)                          136.7%       123.3%       116.4%
_____________________________________________________________________________________ 
                                                 ____________________________________ 
Statutory combined ratio (3)                          108.1%       117.1%       113.6%
_____________________________________________________________________________________ 
                                                 ____________________________________ 
GAAP combined ratio (4)                               135.1%       117.7%       122.5%
_____________________________________________________________________________________ 
                                                 ____________________________________ 
GAAP combined ratio (2)                               135.1%       117.7%       113.6%
_____________________________________________________________________________________ 
                                                 ____________________________________ 
GAAP combined ratio (3)                               106.6%       111.5%       110.8%
_____________________________________________________________________________________ 
                                                 ____________________________________ 
<FN>

(1) Income tax benefits resulted from pretax losses in 1995 and 1993 and tax-exempt
    interest income in 1995, 1994 and 1993.
(2) The 1993 combined ratios have been adjusted for the cumulative effect benefit
    of discounting of workers' compensation life table indemnity reserves 
    ($250.0 million, after tax).
(3) Excludes the effect of additions to environmental and asbestos-related claims reserves,
    and in 1993, has also been adjusted for the cumulative effect benefit of discounting 
    of workers' compensation life table indemnity reserves ($250.0 million, after tax).
(4) The difference between the statutory and GAAP combined ratios primarily reflects the 
    establishment of a reserve for statutory purposes for severance and facilities charges 
    (affecting 1995 and 1994) and the settlement of Proposition 103 (affecting 1994), which 
    were both previously reserved for on a GAAP basis.

</TABLE>

The company entered into a definitive agreement, dated November 
28, 1995, to sell its property-casualty operations to The 
Travelers Insurance Group Inc. for $4.0 billion in cash, subject 
to various closing adjustments.  The sale is subject to state 
regulatory approval and other customary conditions and is expected 
to be completed no later than midyear 1996.  (Please see "Overview 
- Sale of Property-Casualty Operations" on page 6 for further 
discussion of Discontinued Operations.)

Discontinued Operations provide most types of commercial and 
personal property-casualty insurance, bonds, and insurance-related 
services for businesses, government units and associations and 
individuals.


<PAGE> 29

Discontinued Operations - Property-Casualty Operations (Continued)

Discontinued Operations' adjusted earnings (after tax) follow:

<TABLE>
<CAPTION>
(Millions)                                       1995        1994        1993   
________________________________________________________________________________
<S>                                              <C>         <C>         <C>
Income (Loss) before cumulative effect
  adjustments                                    $(222.2)    $  58.1    $   14.0

Less:
    Net realized capital gains (losses)            106.0        (1.4)      128.0
   
    Additions to environmental-related
        claims reserves                           (505.7)     (149.9)      (26.0)

    Additions to asbestos-related
        claims reserves                           (259.5)      (25.4)      (57.7)

    Severance and facilities charge                    -           -       (95.6)
                                                 _______     _______     _______ 

Adjusted earnings                                $ 437.0     $ 234.8     $  65.3
                                                 _______     _______     _______
                                                 _______     _______     _______
</TABLE>

Discontinued Operations' adjusted earnings increased $202 million 
in 1995, following a $170 million increase in 1994.  The following 
significant factors impact the comparison of adjusted earnings:

Catastrophe losses (after tax and net of reinsurance) were 
$65 million, $190 million and $85 million in 1995, 1994 and 1993 
($190 million, $504 million and $174 million pretax and before 
reinsurance), respectively.  Such losses contributed 2.4 points to 
the combined ratio in 1995, compared with 6.4 points and 2.8 
points for 1994 and 1993, respectively.  Catastrophe losses in 
1994 included $161 million ($453 million pretax and before 
reinsurance) from the Los Angeles earthquake and the severe winter 
weather.

1994 adjusted earnings reflected after-tax reductions of 
$66 million in prior year loss reserves related to the personal 
auto business.  1993 adjusted earnings included an increase of 
$259 million (after tax and after discounting) in workers' 
compensation reserves for prior accident years.  Adjusted earnings 
in 1993 were also adversely affected by after-tax additions to 
loss and loss expense reserves for prior accident years of 
$29 million from the company's U.K. reinsurance operation, arising 
principally on discontinued lines and, non-U.S. property 
exposures.  (Please see "Discontinued Operations' Reserves" on 
page 31.) 

Adjusted earnings in 1993 also reflected a net tax benefit of 
$23 million related to revaluing the deferred tax asset as a 
result of the increase in federal income tax rates.


<PAGE> 30

Discontinued Operations - Property-Casualty Operations (Continued)

Adjusted earnings in 1995 as compared to 1994 reflected a 
reduction in the level of ongoing operating expenses, primarily 
due to actions taken by management in prior years to lower costs, 
increased emphasis on underwriting and claims handling, and higher 
net investment income resulting from the reinvestment of proceeds 
from the sale of equity and U.S. Treasury securities in higher 
yielding corporate bonds.  1994 adjusted earnings as compared to 
1993 also reflected a reduction in operating expenses, primarily 
due to management's efforts to lower costs and exiting 
unprofitable markets.  Partially offsetting the improvements in 
1994 adjusted earnings was lower net investment income primarily 
due to lower investment yields.

Earned premiums decreased approximately 6% in both 1995 and 1994.  
The decline in 1995 was due primarily to the transferring of 
additional risk through restructured and expanded reinsurance 
programs, and reductions in residual market business assumed as a 
result of exiting certain markets.  During 1995, the company 
continued to evaluate personal auto market conditions in each 
state and attempted to maintain or increase the company's presence 
in those states that offered acceptable returns and reduce its 
presence in those remaining states where the company was unable to 
earn acceptable returns.  Reductions in personal auto and workers' 
compensation exposures, a decrease in commercial auto exposures, 
generally stricter underwriting in commercial lines, and the 
competitive marketplace contributed to the premium decline in 
1994.

Personal auto and homeowners policies in force at December 31 
were:

<TABLE>
<CAPTION>
(Millions)                      1995        1994        1993
____________________________________________________________
<S>                             <C>         <C>         <C>
Auto                             .6          .6          .7
Homeowners                      1.5         1.5         1.5
</TABLE>

Please see "Severance and Facilities Charge" on page 9 for a 
discussion related to Discontinued Operations' severance and 
facilities charges. 

Net realized capital gains (after tax) in 1995 include 
$156 million resulting from the sale of equity securities in the 
property-casualty investment portfolio primarily due to the 
company's efforts to reduce volatility in its statutory surplus, 
and increase income, and in connection with the agreement to sell 
the property-casualty operations.  Such gains are partially offset 
by a $23 million realized capital loss from the write-down of the 
company's investment in a consolidated subsidiary, Aetna Re-
Insurance Company (U.K.) Ltd., which it intends to sell.  Net 
realized capital gains (losses) (after tax) include a $14 million 
gain resulting from the sale of a portion of an unconsolidated 
subsidiary in 1994 and a $27 million gain in 1993 from the 
redemption of preferred stock received in connection with the sale 
of American Re-Insurance Company.



<PAGE> 31

Discontinued Operations - Property-Casualty Operations (Continued)

Discontinued Operations' Reserves

Loss and loss expense reserves represent the estimated liability 
for the ultimate cost, to the extent reasonably estimable, of 
claims (including claim adjustment expenses) that have been 
reported but not settled and claims that have been incurred but 
not reported ("IBNR").  Such reserves at December 31 were as 
follows:

<TABLE>
<CAPTION>
(Millions)                            1995        1994        1993    
______________________________________________________________________
<S>                                   <C>         <C>         <C>
Loss and Loss Expense Reserves (1)    $ 16,569    $ 16,089    $ 15,806
                                      ________________________________
                                      ________________________________

<FN>

(1) Loss and loss expense reserves are shown without reduction for
    reinsurance recoverables in all three years and deductible amounts
    recoverable from policyholders in 1995 and 1994.  Reinsurance 
    recoverables and deductible amounts recoverable from policyholders
    were $4.4 billion and $412 million, respectively, at 
    December 31, 1995 and $4.6 billion and $352 million, respectively,
    at December 31, 1994.  Reinsurance recoverables were $4.4 billion
    at December 31, 1993.
</TABLE>

The length of time between occurrence and settlement of a claim 
varies depending on the coverage and type of claim involved.  
Estimates become more difficult to make (and are, therefore, more 
subject to change) as such length of time increases.  Actual claim 
costs are dependent upon a number of complex factors including 
social and economic trends and changes in doctrines of legal 
liability and damage awards.  Reserves are continually monitored 
and adjusted using a variety of actuarial and statistical 
techniques as more current information becomes available.

Additions to Reserves for Prior Accident Years

The table below shows the changes in loss estimates (net of 
reinsurance) related to prior accident years, most of which were 
for losses and related expenses for environmental liability risks, 
asbestos and other product liability risks, and workers' 
compensation claims.  Additions (reductions) to reserves for prior 
accident years reduce (increase) net income for the period in 
which the adjustment is made.

<TABLE>
<CAPTION>
                                      
(Millions)                            1995 (1)    1994        1993 (2)  
_____________________________________________________________________   
<S>                                   <C>         <C>         <C>
  Pretax                              $1,134      $  259      $  65
  After tax                              737         168         42

<FN>
(1) Reserve additions in 1995 include the addition to environmental reserves 
    of $750 million ($488 million, after tax) upon the completion of the company's
    1995 environmental study in the second quarter of 1995 and the addition to asbestos
    reserves of $335 million ($218 million, after tax) in the fourth quarter of 1995.

(2) Reserve additions in 1993 are net of the cumulative effect of $514 million (pretax) 
    related to the implementation of discounting of workers' compensation life table indemnity
    reserves.
</TABLE>

<PAGE> 32

Discontinued Operations - Property-Casualty Operations (Continued)

Environmental and Asbestos-Related Claims

Reserving for environmental and asbestos-related claims is subject 
to significant uncertainties.  Reserves for these liabilities are 
evaluated by management regularly and adjustments are made to such 
reserves as developing loss patterns, reserving methodologies and 
other information appear to warrant. As a result of developments 
that have occurred inside and outside of the company (discussed 
below), reserves for environmental and asbestos-related claims 
were increased significantly in 1995.

The company takes reinsurance into account in its reserve 
calculations for environmental and asbestos-related claims only 
when it is probable of collection, based on past experience or 
agreements with reinsurers.  The company believes that the 
reinsurance recoveries which have been taken into account in its 
reserve calculations are probable of recovery; however, there can 
be no assurances that reinsurance for these types of claims will 
not become subject to coverage disputes with reinsurers, or that 
all reinsurers will have the ability to pay the company for such 
claims.

Environmental-Related Claims

Background.  The company has been a major writer of commercial 
__________                                                     
insurance policies which are the types of policies alleged to 
cover hazardous waste cleanup costs.  The company generally 
disputes that there is insurance coverage for environmental 
claims, and is vigorously litigating coverage and related issues 
that will ultimately determine, in many cases, whether and to what 
extent insurance coverage exists for environmental claims.

Environmental claims, particularly large coverage disputes, are 
complex and subject to significant uncertainties in addition to 
the vagaries of and risks inherent in major litigation generally. 
These uncertainties include estimation of the underlying liability 
of a claimant as a potentially responsible party ("PRP") at waste 
disposal sites and whether insurance policies will be found to 
cover PRP liabilities.  Courts have reached inconsistent 
conclusions regarding a wide range of insurance coverage issues 
relating to an insurer's indemnity and defense obligations for 
environmental-related liabilities.  Because of these uncertainties 
and a lack of historically developed data, such liabilities are 
not estimable using conventional actuarial reserving techniques.


<PAGE> 33

Discontinued Operations - Property-Casualty Operations (Continued)

The Company's Environmental Study.  The company has continued to 
_________________________________                                
gather and analyze legal and factual information on environmental-
related claims, and reassess its environmental reserving 
techniques as developments have occurred over time.  During 1994 
and 1995, certain of the company's environmental claims in 
litigation matured (providing the company with additional 
information relating to the claim) or settled.  The maturing and 
settling of these claims, coupled with increasing expertise in 
handling environmental claims, also better enabled the company to 
understand the profile of its other environmental claims.  
Additionally, supplemental data bases and alternative 
methodologies were being developed by outside firms for possible 
use in estimating environmental liabilities.  In connection with 
these developments, the company conducted a comprehensive 
environmental reserving review during the first half of 1995, and, 
upon completion of the review, significantly increased its 
reserves for environmental-related claims.

The company developed a sophisticated methodology which, when used 
in conjunction with other methods and information available to it, 
assisted the company in estimating indemnity-related liabilities 
for all of its known environmental claims.  This methodology (the 
"exposure methodology"), while not a conventional actuarial 
reserving technique, is a detailed analysis that involves the 
estimation of indemnity-related liabilities for environmental 
claims from direct policies on a site-by-site, policyholder-by-
policyholder basis.  The exposure methodology depends heavily upon 
management's subjective judgment, in that it requires management 
to make numerous assumptions as to, among other things, estimated 
total cleanup costs for each site, allocation of site cleanup 
costs to particular policyholders under joint and several 
liability principles, resolution of unsettled coverage questions, 
and resolution of unsettled questions involving the allocation of 
losses to specific insurance policies.  As all of the information 
necessary to estimate liability on a particular site frequently is 
not available, the exposure methodology also simulates data in 
such cases from available data.  Although the exposure methodology 
relies heavily upon management judgment and simulated data, the 
use of simulation models is an appropriate, accepted actuarial 
practice to estimate liabilities subject to significant 
uncertainties.


<PAGE> 34

Discontinued Operations - Property-Casualty Operations (Continued)

In addition to estimating indemnity-related liabilities on known 
claims, as part of its reserving review the company also estimated 
losses for incurred but not reported environmental claims 
("IBNR"), unallocated loss adjustment expenses ("ULAE") associated 
with environmental claims, and additional costs of expected future 
coverage litigation. The company's estimation of IBNR, ULAE and 
coverage litigation costs are based on a combination of historical 
data and various assumptions about the future, including 
assumptions regarding the number and severity of new environmental 
claims that will arise, and trends in the volume and cost of 
future litigation.

Upon completing its 1995 reserving review, the company added 
$750 million (pretax) ($488 million, after tax) to environmental-
related claims reserves.  While the company expects to recover 
some of its environmental losses from its reinsurers, due to the 
uncertainty in estimating amounts to be recovered, no reinsurance 
benefits were recorded in establishing this reserve addition.

The table below reflects activity in the reserve for environmental 
liability claims (pretax and before reinsurance) for the years 
ended December 31:

<TABLE>
<CAPTION>
Environmental Liability Claims (Millions)       1995        1994        1993   
_______________________________________________________________________________
<S>                                             <C>         <C>         <C>
Beginning reserve                               $  436.1    $ 233.3     $ 237.8
Reserve additions for incurred losses (1)          827.0      289.5        37.2
Payments for claims and claim
  adjustment expense (2,3)                         257.2       86.7        41.7
                                                _______________________________
Ending reserve (4)                              $1,005.9    $ 436.1     $ 233.3
_______________________________________________________________________________
                                                _______________________________
<FN>
(1) Before reduction for reinsurance of $49 million in 1995, $59 million in 1994
    and $(3) million in 1993.  In 1995, includes the addition to reserves of 
    $750 million upon the completion of the company's 1995 environmental study.

(2) Before reduction for reinsurance of $78 million in 1995, $4 million in 1994 and 
    $2 million in 1993.

(3) Includes legal fees paid of $46 million in 1995, $52 million in 1994 and 
    $31 million in 1993.

(4) Before reduction for reinsurance of $29 million in 1995, $58 million in 1994 and
    $3 million in 1993 and net of $32 million of discount on settlements in 1995.
</TABLE>

The reserves at December 31, 1995 consist of approximately 
$560 million for indemnity-related environmental liabilities for 
all of the company's known environmental claims.  The remainder of 
the reserve represents IBNR, estimated coverage litigation costs, 
and ULAE.  The reserve at December 31, 1994 consists of 
approximately $299 million for estimated indemnity-related liabilities, 
and the remainder represented a bulk reserve for legal fees.  In 
1994, the company added $290 million pretax and before reinsurance 
($231 million pretax and after reinsurance) to reserves for 
environmental liability claims primarily for certain indemnity-
related liabilities.



<PAGE> 35

Discontinued Operations - Property-Casualty Operations (Continued)

Conclusion.  In the opinion of management, the company's reserves 
__________                                                        
for environmental-related claims at December 31, 1995 represent 
the company's best estimate of its ultimate environmental-related 
liability, based on currently known facts, current law (including 
Superfund), current technology, and assumptions considered 
reasonable where facts are not known.  Due to the significant 
uncertainties and related management judgment involved in 
estimating the company's environmental liability, no assurances 
can be given that the environmental reserve represents the amount 
that will ultimately be paid by the company for all environmental-
related losses.  The amount ultimately paid could differ 
materially from the company's currently recorded reserve as legal 
and factual issues are clarified, but any difference cannot be 
reasonably estimated at this time.

The company actively manages its environmental claims through a 
special environmental claim unit. The number of environmental-
related liability claims the company had as of December 31 (and 
policyholders involved in those claims) were as follows: (1)

<TABLE>
<CAPTION>
                        1995            1994            1993
                        ______          ______          ______
<S>                     <C>             <C>             <C>
Beginning balance        4,587           3,860           2,913
New claims               1,242           1,765           1,903
Closed claims            2,058           1,038             956
                        ______          ______          ______
Ending balance (2)       3,771           4,587           3,860
                        ______          ______          ______
                        ______          ______          ______

Policyholders            1,007           1,146           1,132
                        ______          ______          ______
                        ______          ______          ______

<FN>

(1)  For purposes of this table, "claims" are calculated separately for
     each of the categories described in (2) below and are calculated on
     a "per policyholder, per site" basis.  The "claims" numbers reflect
     cases where policyholders have notified the company of a claim under
     primary insurance policies.  In addition, policyholders have placed
     the company on notice of possible claims that may potentially involve
     excess general liability policies.  The company generally does not
     consider these notifications open "claims" (and the claims numbers
     above do not include these notifications) because under these policies
     (i) the company does not have a duty to defend the policyholder and
     (ii) the policyholders must first exhaust their primary insurance
     coverage for such claims before they can look to the company for coverage.

(2)  Of the claims open at December 31, 1995, 1994 and 1993, approximately 88%, 
     87% and 87%, respectively, represented environmental pollution-related
     cleanup cases (including Superfund claims) against policyholders, and
     the balance represented environmental pollution-related third-party bodily 
     injury and property damage claims against policyholders.  Of the claims open 
     at December 31, 1995, 1994 and 1993, approximately 44%, 53% and 48%, respectively,
     were involved in coverage disputes between the company and its policyholders that 
     had reached the litigation stage.
</TABLE>

The closed claims in 1995 reflect the settlement of certain of the 
company's large cases (which involved multiple claims per case) 
and include claims for which there are remaining reserves of $119 
million which have been discounted and will be paid over a number 
of years, in accordance with a fixed payment schedule.  Management 
believes that year over year there is not a meaningful correlation 
between the number of outstanding environmental claims and either 
the indemnity or loss expense portions of the environmental 
liability.  In addition, loss expenses do not increase 
proportionately with the number of outstanding claims primarily 
because of the company's management of legal costs and because a 
number of new claims involve additional sites relating to 
preexisting policyholder coverage disputes which should not 
proportionately increase legal fees.  Legal costs may vary in 
particular years, however, due to other factors, such as the 
timing of stages of certain large litigation.

<PAGE> 36

Discontinued Operations - Property-Casualty Operations (Continued)

Congress was scheduled to reauthorize the Superfund law in 1995, 
but did not do so.  There continues to be substantial 
dissatisfaction among insurance and business groups and others 
with the current law, particularly with respect to the law's 
cleanup requirements and liability provisions, and there is 
general recognition that major reforms are needed.  However, 
Superfund reform would not directly affect the numerous 
environmental liability claims against the company resulting from 
state and other federal environmental cleanup programs.  At this 
time, it is too early to determine whether the law will be 
reauthorized and reformed in 1996, what the substance of the 
enacted legislation will be, or what the effect of any such 
reforms will be on the company.

Asbestos-Related Claims

Reserving for asbestos-related claims is subject to significant 
uncertainties and management is currently unable to make a 
reasonable estimate as to the ultimate amount of losses or a 
reasonable range of losses for all asbestos-related claims and 
related litigation expenses.  Management has continued to evaluate 
the company's reserves for asbestos liabilities as the company 
continued to gather and analyze new information and reassess its 
reserving techniques for these claims in order to determine 
whether it can better estimate its liability.  In connection with 
such evaluation, the company added $335 million ($218 million, 
after tax) to asbestos-related claims reserves in the fourth 
quarter of 1995.  While the company expects to recover some of its 
asbestos losses from its reinsurers, due to the uncertainty in 
estimating amounts to be recovered, no reinsurance benefits were 
recorded in establishing this addition to reserves.  Further 
adjustments may be made to such reserves as loss patterns develop 
and other information is obtained, and the amount ultimately paid 
for such claims could differ materially from reserves, although 
any difference cannot be reasonably estimated at this time.

Asbestos Bodily Injury Claims

Numerous liability claims for bodily injury have been asserted 
against major producers of asbestos and asbestos products, some of 
which are insureds of the company.  In order to control 
transaction costs and provide efficient claim handling, the Center 
for Claims Resolution ("CCR") was formed in 1988 to handle 
asbestos-related bodily injury claims on behalf of its member 
producers.  The company participates in CCR by virtue of its 
insurance contracts with certain CCR members and is assessed a fee 
by CCR for its claim-handling services.  The company also provides 
insurance coverage to producers that are not CCR members.

A large number of asbestos bodily injury actions that were pending 
in pretrial stages in various courts have been consolidated and 
transferred to single federal or state courts.  In January 1993, 
CCR announced a global proposal involving plaintiffs, attorneys, 
producers and insurers to settle asbestos bodily injury claims 
over the next 10 years.  The proposed settlement is subject to, 
among other things, court approval and acceptance by a minimum 
number of plaintiffs, and no assurance can be given that all such 
claims will be settled, or settled on the terms proposed.  To 
date, the CCR proposed settlement has not received final approval 
by the courts.


<PAGE> 37

Discontinued Operations - Property-Casualty Operations (Continued)

Over the last few years, asbestos bodily injury claims also have 
been filed by plaintiffs against entities that installed asbestos 
products and others involved in ancillary ways with asbestos 
products or processes, including insureds of the company.  
Additionally, some policyholders have attempted to recharacterize 
asbestos bodily injury product liability claims in an effort to 
avoid applicable policy coverage limits on product liability 
claims (i.e., nonproducts asbestos claims).

In 1995 the company settled a case involving one such major 
producer that had exhausted applicable policy limits on asbestos 
products claims and asserted coverage under policy provisions for 
other types of liability. The company obtained a release from the 
insured for all current and future asbestos bodily injury claims 
and certain asbestos property damage claims (along with all 
environmental claims) under existing policies in exchange for 
fixed, scheduled cash payments, which were recorded on a 
discounted basis.  In connection with this settlement, 
$120 million of property-casualty reserves not previously 
classified as covering asbestos-related claims were transferred to 
asbestos reserves.  No amounts were transferred from environmental 
reserves, and the environmental-related portion of the settlement 
was covered by existing environmental reserves.  As a result, this 
settlement did not affect 1995 results of operations.  As part of 
the settlement, the company also agreed, among other things, to 
make insurance coverage available to the insured in the year 2000 
(on a one-time basis), for a percentage of all asbestos defense 
and indemnity claim payments made by the insured in the years 2000 
through 2007.  The company's payment obligations would be subject 
to annual dollar caps.  Given the uncertainty as to whether the 
insured will elect to purchase this additional insurance, no 
related premiums or losses have been recorded by the company at 
this time.

The table below reflects activity in the reserve for asbestos 
bodily injury claims (pretax and before reinsurance) for the years 
ended December 31:

<TABLE>
<CAPTION>

Asbestos Bodily Injury Claims (Millions)         1995        1994        1993   
________________________________________________________________________________
<S>                                              <C>         <C>         <C>
Beginning reserve                                $ 295.9     $ 248.1     $ 294.9
Reserve additions for incurred losses (1)          436.6       117.3        95.2
Transfers                                          107.4           -           -
Payments for claims and claim
  adjustment expense (2,3)                          85.6        69.5       142.0
                                                 _______________________________
Ending reserve (4)                               $ 754.3     $ 295.9     $ 248.1
________________________________________________________________________________
                                                 _______________________________

<FN>
(1) Before reduction for reinsurance of $37 million in 1995, $82 million in 1994 
    and $20 million in 1993.
(2) Before reduction for reinsurance of $9 million in 1995, $65 million in 1994
    and $27 million in 1993.
(3) Includes legal fees paid of $29 million in 1995, $30 million in 1994 and
    $56 million in 1993.
(4) Before reduction for reinsurance of $90 million in 1995, $62 million in 1994
    and $45 million in 1993 and net of $26 million of discount on settlements in 
    1995.
</TABLE>


<PAGE> 38

Discontinued Operations - Property-Casualty Operations (Continued)

At December 31, 1995 and 1994, approximately 26% and 33%, 
respectively, of reserves (pretax and before reinsurance) 
represented legal fees. 1993 payment levels primarily reflect 
increased settlements of asbestos bodily injury claims, including 
settlements of certain large claims for which reserves had 
previously been established.

The company's indemnity payments per claim with respect to all 
asbestos bodily injury claims have varied over time and from case 
to case, due primarily to wide variations in insureds, policy 
terms, types of claims, injury and the results of claim-settling 
mechanisms (such as CCR). Management cannot predict whether 
indemnity payments per claim will increase, decrease or remain the 
same.

The number of asbestos bodily injury claims the company had as of 
December 31 (and policyholders involved in those claims) were as 
follows: (1)

<TABLE>
<CAPTION>
                        1995         1994         1993
                        _____        _____        _____
<S>                     <C>          <C>          <C>
Beginning balance       1,277        1,283        1,864
New claims                261          271          248
Closed claims             540          277          829
                        _____        _____        _____
Ending balance (2)        998        1,277        1,283
                        _____        _____        _____
                        _____        _____        _____

Policyholders             329          318          287
                        _____        _____        _____
                        _____        _____        _____

<FN>
(1) The "claims" numbers above reflect cases where policyholders have notified the company 
    of a claim under primary insurance policies.  In addition, they reflect cases where 
    policyholders have placed the company on notice of possible claims that may potentially 
    involve excess general liability policies in those instances where the company believes 
    its excess policies are likely to be accessed.
(2) Certain of the company's claims represent a claim by an individual claimant and others 
    represent a claim on behalf of multiple claimants.  At December 31, 1995, 1994 and 1993,
    approximately 83%, 84% and 83%, respectively, represent claims which have multiple claimants.
</TABLE>

Management believes that there is not a high correlation between 
the number of outstanding asbestos claims and the recorded 
reserves for such claims.  The new claims generally relate to 
policyholders having a small number of claims and lower exposure 
individually.  The closed claims in 1995 reflect the consolidation 
of certain multiple claimant claims into a single claim count, and 
the settlement of a large nonproducts asbestos case.  Reserves 
with a discounted value of $92 million related to this 1995 
settlement will be paid over a number of years, in accordance with 
a fixed payment schedule.  The closed claims in 1993 reflect the 
increased activity related to a small number of large 
policyholders pertaining to the CCR settlement.

Asbestos Property Damage Claims

In addition to bodily injury claims, property damage claims have 
been brought against the company's insureds seeking reimbursement 
for the expense of replacing insulation material and other 
building components made of asbestos.  It is the company's 
position that in most cases its product liability policies do not 
cover this replacement expense.  Management cannot predict whether 
the courts will ultimately support the company's position.  
Recently, however, the company has selectively settled claims 
where it has considered it reasonable and appropriate to do so.


<PAGE> 39

Discontinued Operations - Property-Casualty Operations (Continued)

The table below reflects activity in the reserve for asbestos 
property damage claims (pretax and before reinsurance) for the 
years ended December 31:

<TABLE>
<CAPTION>

Asbestos Property Damage Claims (Millions)     1995        1994        1993  
_____________________________________________________________________________
<S>                                            <C>         <C>         <C>
Beginning reserve                              $  29.9    $  28.7     $  31.3
Reserve additions for incurred losses (1)           .2        6.2        16.9
Transfers                                         12.6          -           -
Payments for claims and claim
  adjustment expense (2)                          20.4        5.0        19.5
                                               ______________________________
Ending reserve (3)                             $  22.3    $  29.9     $  28.7
_____________________________________________________________________________
                                               ______________________________

<FN>

(1) Before reduction for reinsurance of less than $1 million in 1995 and $3 million
    in each of 1994 and 1993.
(2) Before reduction for reinsurance of $8 million in 1995 and $3 million in 1994.
    There were no such reinsurance recoveries in 1993.
(3) Before reduction for reinsurance of $(1) million in 1995 and $7 million in each 
    of 1994 and 1993.

</TABLE>

In the limited number of asbestos property damage cases where 
payments have been made by the company, indemnity payments per 
claim have varied over time and from case to case primarily 
because of variations in insurance policies and policy limits, the 
type of asbestos product installed and relevant state law.  
Management cannot predict whether such indemnity payments per 
claim will increase, decrease or remain the same.

The number of asbestos property damage claims the company had as 
of December 31 (and policyholders involved on those claims) were 
as follows:

<TABLE>
<CAPTION>
                        1995      1994      1993
                        ____      ____      ____
<S>                     <C>       <C>       <C>
Beginning balance       275       336       308
New claims               18        53        53
Closed claims           167       114        25
                        ___       ___       ___
Ending balance (1)      126       275       336
                        ___       ___       ___
                        ___       ___       ___

Policyholders            19        48        43
                        ___       ___       ___
                        ___       ___       ___

<FN>

(1) Certain of the company's claims represent claims related to individual properties and
    others represent claims related to multiple properties.  At December 31, 1995, 1994
    and 1993, approximately 62%, 44% and 32%, respectively, represent claims which relate 
    to multiple properties.
</TABLE>

The closed claims in 1995 reflect management's efforts to settle 
certain significant cases and extinguish the company's potential 
liability for such claims.

<PAGE> 40

Discontinued Operations - Property-Casualty Operations (Continued)

Workers' Compensation Claims

The company added $579 million (pretax, before the cumulative 
effect of implementing discounting) to prior accident year loss 
reserves in 1993 for workers' compensation claims.  Of this 
addition, approximately $250 million related to reserves for 
workers' compensation life table indemnity claims.  The increase 
of $579 million resulted from a study of the company's workers' 
compensation reserves and the factors which were contributing to 
its adverse developments.  Concurrent with this addition to 
workers' compensation reserves, the company implemented a change 
in accounting to discount reserves for workers' compensation life 
table indemnity claims in order to more accurately reflect the 
economic value of the company's obligations and improve the 
matching of revenues and expenses.  Such discounting was 
consistent with industry practice.  This discounting resulted in a 
reduction as of December 31, 1993 of $614 million (pretax) to loss 
reserves for workers' compensation claims.  (Please see Note 2 of 
Notes to Financial Statements.)

Estimating workers' compensation reserves is particularly 
difficult (and, therefore, more subject to change than many other 
types of property-casualty claims), largely because of the length 
of the "tail" associated with workers' compensation claims.  
Workers' compensation claim costs are dependent on a number of 
complex factors including social and economic trends and changes 
in doctrines of legal liability and damage awards.

Other

Policyholders of the company also seek insurance coverage from the 
company for other long-term exposure claims against them, 
including claims relating to silicone-based personal products, 
lead paint and other allegedly toxic or harmful substances.  
Evaluating and reserving for these types of exposures is complex 
and subject to many uncertainties including those stemming from 
coverage issues, long latency periods and changing or expanding 
laws and legal theories of liability.  Adjustments will be made to 
such reserves as claims mature or settle and as new information 
becomes available to the company, and such adjustments may be 
material.

As a result of the sale of the property-casualty operations, Aetna 
currently expects to retain no property-casualty claim liability other 
than an obligation to indemnify Travelers for a portion of certain 
potential liability exposures which are currently under discussion with 
insureds.  While there can be no assurances, management does not believe 
that the ultimate loss arising from this indemnification, if any, will 
be material to the company.

In connection with the 1992 sale of American Re-Insurance Company 
("Am Re"), Am Re and a property-casualty subsidiary ("the 
subsidiary") entered into a reinsurance agreement which provides 
that to the extent Am Re incurred losses in 1991 and prior that 
were still outstanding at January 1, 1992 in excess of $2.7 
billion (or $362 million in excess of Am Re's reserves as of 
December 31, 1991, adjusted for certain reinsurance transactions), 
the subsidiary has an 80% participation in payments on those 
losses up to a maximum payment by the subsidiary of $500 million.  
In 1995, Am Re increased reserves for asbestos, environmental and 
other latent liabilities.  As a result of this increase, losses of 
approximately $228 million ($120 million after discount), which 
were largely workers' compensation life table indemnity claims, 
were ceded to the subsidiary. There was no material impact on 1995 
earnings as the subsidiary had previously established reserves.  
It is reasonably possible that additional undiscounted losses of 
up to approximately $270 million pretax could be ceded to the 
company in the future.


<PAGE> 41

Discontinued Operations - Property-Casualty Operations (Continued)

Outlook

The company expects that the sale of its property-casualty 
operations will be completed no later than midyear 1996 with a 
resulting gain on sale.  Company earnings up through the close of 
the transaction are subject to variability due to the results of 
the property-casualty operations.  While such results will not 
adjust the purchase price, income or loss from such operations 
will decrease or increase, respectively, the gain expected to be 
recognized on such sale.


<PAGE> 42

General Account Investments

Investment-related amounts disclosed in the following investment 
section relate to assets supporting continuing operations 
(including assets supporting discontinued products and experience 
rated products) and assets supporting Discontinued Operations.  
(Please see "Large Case Pensions" on page 23 for a discussion of 
discontinued products and "Discontinued Operations - Property-
Casualty Operations" on page 28.)

<TABLE>
<CAPTION>
                                                          December 31,      
                                                    ________________________
(Millions)                                          1995          1994      
____________________________________________________________________________
<S>                                                 <C>           <C>
Invested Assets:
    Fully Guaranteed                                $ 13,490.3    $ 14,415.9
    Experience Rated                                  18,763.4      16,362.3
    Other                                             11,796.6      10,751.6
                                                    __________     _________
Total General Account Invested Assets -
 continuing operations, net of impairment reserves  $ 44,050.3    $ 41,529.8
____________________________________________________________________________
                                                    ________________________
Net investment income - continuing operations       $  3,575.1    $  3,631.4
____________________________________________________________________________
                                                    ________________________

Invested Assets - Discontinued Operations           $ 13,986.5    $ 12,763.5
____________________________________________________________________________
                                                    ________________________

Net investment income - Discontinued Operations     $    901.7    $    832.1
____________________________________________________________________________
                                                    ________________________
</TABLE>

At December 31, 1995 and 1994, the company's invested assets 
supporting continuing operations were comprised of the following, 
net of impairment reserves:

<TABLE>
<CAPTION>
(Millions)                                        1995          1994      
__________________________________________________________________________
<S>                                               <C>           <C>
Debt securities:
   Available for sale, at fair value
    (amortized cost $29,962.5 and $27,208.3)      $ 31,860.3    $ 25,938.1
   Held for investment, at amortized
    cost (fair value $1,584.1)*                            -       1,587.3
Equity securities, at fair value
    (cost $597.8 and $594.0)                           659.7         614.6
Short-term investments                                 607.8         344.4
Mortgage loans                                       8,327.2      10,389.9
Real estate                                          1,277.3       1,283.7
Policy loans                                           629.4         533.8
Other                                                  688.6         838.0
__________________________________________________________________________
  Total invested assets - continuing operations   $ 44,050.3    $ 41,529.8
__________________________________________________________________________
                                                  ________________________
<FN>

*   Please see Note 1 of Notes to Financial Statements for a discussion of
    transfers of securities from Held for Investment to Available for Sale 
    in 1995.

</TABLE>


<PAGE> 43

General Account Investments (Continued)

At December 31, 1995 and 1994, the company's invested assets 
supporting Discontinued Operations were comprised of the 
following, net of impairment reserves:

<TABLE>
<CAPTION>
(Millions)                                        1995          1994      
__________________________________________________________________________
<S>                                               <C>           <C>
Debt securities:
   Available for sale, at fair value
    (amortized cost $11,293.8 and $9,775.9)       $ 11,705.6    $  9,172.6
   Held for investment, at amortized
    cost (fair value $407.1)*                              -         413.5
Equity securities, at fair value
    (cost $313.8 and $802.5)                           525.5       1,041.0
Short-term investments                                 137.2         106.0
Mortgage loans                                       1,061.7       1,453.7
Real estate                                            264.7         262.0
Other                                                  291.8         314.7
__________________________________________________________________________
  Total invested assets - Discontinued Operations $ 13,986.5    $ 12,763.5
__________________________________________________________________________
                                                  ________________________
<FN>

*   Please see Note 1 of Notes to Financial Statements for a discussion of
    transfers of securities from Held for Investment to Available for Sale 
    in 1995.

</TABLE>

The company's investment objective for both continuing operations 
and Discontinued Operations is to fund policyholder and other 
liabilities in a manner which enhances shareholder and 
contractholder value, subject to appropriate risk constraints.  It 
is the company's intention that this investment objective be met 
by a mix of investments which reflects the characteristics of the 
liabilities they support; diversifies the types of investment 
risks in its portfolios by interest rate, liquidity, credit and 
equity price risk; and achieves asset diversification by 
investment type, industry, issuer and geographic location.  The 
company regularly projects duration and cash flow characteristics 
of its liabilities and makes appropriate adjustments in the asset 
portfolios.

Interest rate risk is managed within a tight duration band, and 
credit risk is managed by maintaining high average bond ratings 
and diversified sector exposure.  In pursuing its investment and 
risk management objectives, the company utilizes assets whose 
market value is at least partially determined by, among other 
things, levels of or changes in domestic and/or foreign interest 
rates (short term or long term), exchange rates, prepayment rates, 
equity markets or credit ratings/spreads.  (Please see "Use of 
Derivatives and Other Investments" on page 59.)

Using financial modeling and other techniques, the company 
regularly evaluates the appropriateness of the investments 
relative to the company's management-approved investment 
guidelines and the business objectives of the portfolios 
(including evaluating the interest rate, liquidity, credit and 
equity price risk resulting from derivative and other portfolio 
activities).  During 1995, the company operated within such 
investment guidelines by maintaining a mix of investments that 
diversifies its assets and reflects the characteristics of the 
liabilities which they support.


<PAGE> 44

General Account Investments (Continued)

The change in the invested assets portfolio supporting continuing 
operations from December 31, 1994 to December 31, 1995 primarily 
reflected appreciation of debt securities due to a decrease in 
interest rates, partially offset by a net decrease in the mortgage 
loan and real estate portfolios.  Debt securities reflected net 
unrealized capital gains of $1.9 billion at December 31, 1995, 
compared with net unrealized capital losses of $1.3 billion at 
December 31, 1994.  Of such net unrealized capital gains at 
December 31, 1995, $421 million and $960 million related to assets 
supporting discontinued products and experience rated pension 
contractholders, respectively.  The net decrease in the mortgage 
loan and real estate portfolios of $2.1 billion principally 
reflected prepayments, payments at maturity on mortgage loans, 
write-offs on foreclosures and sales of foreclosed properties and 
loans.

The risks associated with investments supporting experience rated 
pension and annuity products are assumed by those customers 
subject to, among other things, certain minimum guarantees.  The 
anticipated future losses associated with investments supporting 
discontinued large case pension products were provided for in the 
reserve on discontinuance of products.

The change in the invested assets portfolio supporting 
Discontinued Operations from December 31, 1994 to December 31, 
1995 reflected increases in debt securities due to appreciation of 
value resulting from a decrease in interest rates and reinvestment 
of proceeds from sales of equity securities, and a net decrease in 
the mortgage loan and real estate portfolios.  Debt securities 
reflected net unrealized capital gains of $412 million at 
December 31, 1995, compared with net unrealized capital losses of 
$603 million at December 31, 1994. The net decrease in the 
mortgage loan and real estate portfolios of $389 million 
principally reflected prepayments, payments at maturity on 
mortgage loans, write-offs on foreclosures and sales of foreclosed 
properties and loans.  The net decrease in the equity securities 
portfolio of $516 million principally reflected sales which were 
completed in an effort to reduce volatility in statutory surplus, 
and increase income, as well as in connection with the sale of 
this business to The Travelers Insurance Group Inc. ("Travelers").  
Such decreases were partially offset by market appreciation in the 
equity securities portfolio. The company intends to continue to 
reduce the equity securities portfolio through the closing date of 
the sale to Travelers through a combination of sales, including 
the sale of a significant portion of its holdings in MBIA Inc. to 
the public, and transfers to continuing operations.

Debt Securities

As of December 31, 1995 and 1994, the company's investments in 
debt securities (including those supporting Discontinued 
Operations) represented 75% and 68%, respectively, of total 
general account invested assets and were as follows:

<TABLE>
<CAPTION>
(Millions)                                      1995               1994     
____________________________________________________________________________
<S>                                             <C>                <C>
Supporting discontinued products                $ 5,765.2          $ 6,155.0
Supporting experience rated products             14,243.4           11,770.5
Supporting remaining products                    11,851.7            9,599.9
____________________________________________________________________________
  Total debt securities - continuing operations $31,860.3          $27,525.4
____________________________________________________________________________
                                                ____________________________

Debt securities - Discontinued Operations       $11,705.6          $ 9,586.1
____________________________________________________________________________
                                                ____________________________
</TABLE>


<PAGE> 45

General Account Investments (Continued)

It is management's objective that the continuing operations and 
Discontinued Operations portfolios of debt securities be of high 
quality and be well-diversified by market sector.  The debt 
securities in the company's portfolios are generally rated by 
external rating agencies, and, if not externally rated, are rated 
by the company on a basis believed to be similar to that used by 
the rating agencies.

As of December 31, 1995 and 1994, the company's investments in 
debt securities supporting continuing operations and Discontinued 
Operations by quality ratings and market sector were as follows:

<TABLE>
<CAPTION>

Debt Securities Quality Ratings                    Debt Securities Investments by Market Sector
                                                                                                 
           Continuing     Discontinued                                      Continuing     Discontinued
           Operations      Operations                                       Operations      Operations_
______________________________________             ___________________________________________________ 
<S>            <C>             <C>                 <C>                           <C>             <C> 
December 31, 1995:                                 December 31, 1995:
_________________                                  _________________ 

AAA            39.6%           53.9%               Corporate                     38.4%         27.6%
AA             13.3%           11.1%               Treasuries/Agencies           14.3%         27.8%
A              26.7%           20.8%               Mortgage-Backed Securities    18.1%         14.5%
BBB            15.3%           10.9%               Financial                     15.1%         11.9%
BB & Below      5.1%            3.3%               Public Utilities               8.0%          6.6%
                                                   Other Loan Backed              5.5%          6.1%
Average Rating   AA-             AA                Municipals                      .6%          5.5%

December 31, 1994:                                 December 31, 1994:
_________________                                  _________________ 

AAA            44.6%           58.8%               Corporate                     30.0%         22.5%
AA             10.6%           10.2%               Treasuries/Agencies           18.7%         36.5%
A              23.2%           18.0%               Mortgage-Backed Securities    19.8%         13.3%
BBB            16.3%            8.7%               Financial                     18.1%          5.8%
BB & Below      5.3%            4.3%               Public Utilities               7.7%          5.6%
                                                   Other Loan Backed              4.9%          3.3%
Average Rating   AA              AA                Municipals                      .8%         13.0%
</TABLE>


<PAGE> 46

General Account Investments (Continued)

Included in the company's total debt security balances were the 
following categories of debt securities:

<TABLE>
<CAPTION>
(Millions)                                                   December 31, 1995                         
_______________________________________________________________________________________________________
                                       "Below Investment        "Problem" Debt      "Potential Problem"
                                       Grade" Securities        Securities           Debt Securities   
                                       _________________        ______________       __________________

<S>                                    <C>                      <C>                  <C>
Total - continuing operations          $1,623.8 (1)             $   81.0             $   90.4
                                       ________                 ________             ________
                                       ________                 ________             ________

Percentage of total - continuing 
  operations:
  Supporting discontinued products         26.1%                    36.9%                57.5%
  Supporting experience rated products     42.6                     12.5                 24.1
  Supporting remaining products            31.3                     50.6                 18.4
                                       ________                 ________             ________
                                          100.0%                   100.0%               100.0%
                                       ________                 ________             ________ 
                                       ________                 ________             ________ 

Total - Discontinued Operations        $  381.3 (1)             $     .6             $      -
                                       ________                 ________             ________
                                       ________                 ________             ________


                                                             December 31, 1994                         
                                       ________________________________________________________________
                                       "Below Investment        "Problem" Debt      "Potential Problem"
                                       Grade" Securities        Securities           Debt Securities   
                                       _________________        ______________       __________________

<S>                                    <C>                      <C>                  <C>
Total - continuing operations          $1,462.3 (1)             $  143.4             $  149.5
                                       ________                 ________             ________
                                       ________                 ________             ________

Percentage of total - continuing 
  operations:
  Supporting discontinued products         35.7%                    36.3%                31.7%
  Supporting experience rated products     33.0                     14.7                 33.7
  Supporting remaining products            31.3                     49.0                 34.6
                                       ________                 ________             ________
                                          100.0%                   100.0%               100.0%
                                       ________                 ________             ________ 
                                       ________                 ________             ________ 

Total - Discontinued Operations        $  410.7 (1)             $    3.0             $   20.5
                                       ________                 ________             ________
                                       ________                 ________             ________

<FN>
(1)  "Below Investment Grade" securities supporting continuing operations at December 31, 1995 and
      1994 include $625.1 million and $900.2 million, respectively, of securities that were investment
      grade when purchased, but have since deteriorated in quality.  Likewise, "Below Investment
      Grade" securities supporting Discontinued Operations at December 31, 1995 and 1994 include 
      $113.5 million and $186.5 million, respectively, of securities that were investment grade when 
      purchased, but have since deteriorated in quality.
</TABLE>

"Below investment grade" securities (which include "problem" debt 
securities and "potential problem" debt securities described 
below) are defined to be securities that carry a rating below BBB-
/Baa3.  Such debt securities have been written down for other than 
temporary declines in value.

Management defines "problem" debt securities to be securities for 
which payment is in default, securities of issuers which are 
currently in bankruptcy or in out-of-court reorganizations, or 
securities of issuers for which bankruptcy or reorganization 
within six months is considered likely.

"Potential problem" debt securities are currently performing debt 
securities for which neither payment default nor debt 
restructuring is anticipated within six months, but whose issuers 
are experiencing significant financial difficulties.  Identifying 
such potential problem debt securities requires significant 
judgment as to likely future market conditions and developments 
specific to individual debt securities.


<PAGE> 47

General Account Investments (Continued)

The company does not accrue interest on problem debt securities 
when management believes the likelihood of collection of interest 
is doubtful.  Lost investment income on problem debt securities 
for the years ended December 31 was as follows:

<TABLE>

<CAPTION>

(Millions)                               1995        1994       1993  
______________________________________________________________________
<S>                                      <C>         <C>        <C>
Allocable to discontinued products       $  1.5      $  3.4     $  3.5
Allocable to experience rated products      1.3         1.0         .5
Allocable to remaining products             2.5         4.8         .6
______________________________________________________________________
 Total lost investment income -
  continuing operations                  $  5.3      $  9.2     $  4.6
______________________________________________________________________
                                         _____________________________

Lost investment income - Discontinued 
    _                                 
  Operations                             $   .6      $  1.0     $  1.0
______________________________________________________________________
                                         _____________________________

</TABLE>

Collateralized Mortgage Obligations

Included in the company's total collateralized mortgage 
obligations ("CMOs") balances were the following categories of 
CMOs:


<TABLE>

<CAPTION>

(Millions)                                      1995                        1994
___________________________________________________________________________________________
                                         Fair         Amortized      Fair         Amortized
                                         Value          Cost         Value          Cost___
                                         _________    _________      ________     _________
<S>                                      <C>          <C>            <C>          <C>      
Total CMOs - continuing operations (1)   $ 3,082.8    $ 2,876.1      $ 3,091.4    $ 3,249.8
                                         _________    _________      _________    _________
                                         _________    _________      _________    _________
Percentage of total CMOs - 
 continuing operations:
   Sequential and planned
     amortization class bonds                 76.6%                       83.7%
   Z-tranches                                 15.8                         8.8
   Interest-only strips and
     principal-only strips                     2.3                         3.2
   Other                                       5.3                         4.3
                                         _________                   _________
Total - continuing operations                100.0%                      100.0%
                                         _________                   _________ 
                                         _________                   _________ 

Total CMOs - Discontinued Operations (1) $   306.0    $   304.4      $   278.1    $   312.9
                                         _________    _________      _________    _________
                                         _________    _________      _________    _________

<FN>

(1)  At December 31, 1995 and 1994, approximately 74% and 77%, respectively, of the 
     company's continuing operations' CMO holdings and approximately 38% and 44%, 
     respectively, of the company's Discontinued Operations' CMO holdings were 
     collateralized by residential mortgage loans, on which the timely payment of 
     principal and interest is backed by specified government agencies (e.g., GNMA, 
     FNMA, FHLMC).

</TABLE>


<PAGE> 48

General Account Investments (Continued)

The principal risks inherent in holding CMOs are prepayment and 
extension risks related to dramatic decreases and increases in 
interest rates whereby the value of the CMOs would be subject to 
variability on the repayment of principal from the underlying 
mortgages earlier or later than originally anticipated.  If due to 
declining interest rates, principal was to be repaid earlier than 
originally anticipated, the company could be affected by a 
decrease in investment income due to the reinvestment of these 
funds at a lower interest rate.  Such prepayments may also result 
in a duration mismatch between assets and liabilities, which could 
be corrected as cash from prepayments could be reinvested at an 
appropriate duration to adjust the mismatch.  Conversely, if due 
to increasing interest rates, principal was to be repaid slower 
than originally anticipated, the company could be affected by a 
decrease in cash flow, which reduces the ability to reinvest 
expected principal repayments at higher interest rates.  Such 
slower payments may also result in a duration mismatch between 
assets and liabilities, which could be corrected as available cash 
flow could be reinvested at an appropriate duration to adjust the 
mismatch.

The various categories of CMOs are subject to different degrees of 
risk from changes in interest rates and defaults (for non-agency-
backed bonds).  Sequential and planned amortization class bonds 
are subject to less prepayment and extension risk than other CMO 
instruments. Interest-only strips ("IOs") receive payments of 
interest and principal-only strips ("POs") receive payments of 
principal on the underlying pool of residential mortgages.  The 
company has mitigated the risks associated with holding IOs and 
POs by holding positions in both types of instruments such that 
exposure from significant changes in interest rates is reduced.  
Z-tranches receive principal payments from the underlying mortgage 
pool only after all other priority classes have been retired.


<PAGE> 49

General Account Investments (Continued)

Mortgage Loans

During 1995, the total mortgage loan portfolio was reduced 21% to 
$9.4 billion, net of impairment reserves.  At December 31, 1995 
and 1994, the company's total mortgage loan investments, net of 
impairment reserves, supported the following types of business:

<TABLE>
<CAPTION>
(Millions)                                 1995               1994    
______________________________________________________________________
<S>                                        <C>                <C>
Supporting discontinued products           $ 3,388.6         $ 4,294.9
Supporting experience rated products         2,642.6           3,652.1
Supporting remaining products                2,296.0           2,442.9
______________________________________________________________________
   Total mortgage loan investments -
     continuing operations                 $ 8,327.2         $10,389.9
______________________________________________________________________
                                           ___________________________

Mortgage loan investments - Discontinued
                                        
   Operations                              $ 1,061.7         $ 1,453.7
______________________________________________________________________
                                           ___________________________
</TABLE>

The company continued to manage its mortgage loan portfolio during 
1995 to reduce the balance in absolute terms and relative to 
invested assets, and to reduce its overall risk. The $2.5 billion 
decrease in the total mortgage loan portfolio since December 31, 
1994 reflects the effect of repayments of maturing loans, loan 
prepayments and foreclosures (actual and in-substance).  
Additionally, in December 1995, the company completed the sale and 
securitization of $443 million of commercial mortgage loans 
supporting discontinued products.  Concurrent with the sale, the 
company retained approximately $108 million of subordinate and 
residual certificates which were classified as debt securities at 
December 31, 1995.  The net proceeds from the sale were 
approximately $338 million.


<PAGE> 50

General Account Investments (Continued)

At December 31, 1995 and 1994, the company's mortgage loan 
balances, net of specific impairment reserves, by property type 
and geographic region were as follows:

<TABLE>
<CAPTION>
December 31, 1995
_________________
                                                 Hotel/               Mixed
(Millions)         Office    Retail    Apartment Motel     Industrial Use       Other    Total    
__________________________________________________________________________________________________
<S>                <C>       <C>       <C>       <C>       <C>        <C>       <C>      <C>
South Atlantic     $   538.8 $   301.6 $   114.0 $   426.7 $   195.3  $  152.1  $   27.1 $ 1,755.6
Middle Atlantic        807.3     400.3     116.3      81.7      33.8     118.5       4.8   1,562.7
New England            555.6     214.9        .5     124.2      41.7      37.5      11.0     985.4
South Central          300.2     192.4      56.7      54.6      29.3         -      23.4     656.6
North Central          537.1     146.4      62.9     101.3      28.5      24.6      32.3     933.1
Pacific and
  Mountain             786.4     426.7     122.4     113.2     334.0      21.6      98.5   1,902.8
                                                                                                  
Other                   94.5     152.1     127.8      20.2      64.3       6.5     309.3     774.7
__________________________________________________________________________________________________
   Total - continuing
     operations    $ 3,619.9 $ 1,834.4 $   600.6 $   921.9 $   726.9 $   360.8  $  506.4   8,570.9
__________________________________________________________________________________________________
Less general portfolio 
  loss reserve                                                                               243.7
__________________________________________________________________________________________________
   Adjusted total - continuing operations, net of reserves                               $ 8,327.2
__________________________________________________________________________________________________
                                                                                         _________
Total - Discontinued
  Operations       $   527.2 $   256.3 $   168.7 $    59.7 $    31.1 $    42.8  $   20.3 $ 1,106.1
__________________________________________________________________________________________________
Less general portfolio
  loss reserve                                                                                44.4
__________________________________________________________________________________________________
   Adjusted total - Discontinued Operations, net of reserves                             $ 1,061.7
__________________________________________________________________________________________________
                                                                                         _________

December 31, 1994
_________________
                                                 Hotel/               Mixed
(Millions)         Office    Retail    Apartment Motel     Industrial Use       Other    Total    
__________________________________________________________________________________________________
<S>                <C>       <C>       <C>       <C>       <C>        <C>       <C>      <C>
South Atlantic     $   667.9 $   380.6 $   205.6 $   610.3 $   232.9  $  153.2  $   33.0 $ 2,283.5
Middle Atlantic        944.3     452.6     188.0     124.0      52.2     118.5       9.2   1,888.8
New England            635.6     217.2       4.8      75.8      44.2     209.9      28.9   1,216.4
South Central          314.1     274.3     153.3      63.6      46.4         -      27.3     879.0
North Central          585.5     235.8      77.2     144.8      29.0      47.6      45.0   1,164.9
Pacific and
  Mountain           1,052.3     535.9     242.7     143.0     435.3      76.6      80.0   2,565.8
Other                   95.8     149.1     131.3      21.0      59.8       3.4     222.6     683.0
__________________________________________________________________________________________________
   Total - continuing
     operations    $ 4,295.5 $ 2,245.5 $ 1,002.9 $ 1,182.5 $   899.8 $   609.2  $  446.0  10,681.4
__________________________________________________________________________________________________
Less general portfolio
  loss reserve                                                                               291.5 *
__________________________________________________________________________________________________  
   Adjusted total - continuing operations, net of reserves                               $10,389.9
__________________________________________________________________________________________________
                                                                                         _________
Total - Discontinued
  Operations       $   660.6 $   379.4 $   224.4 $   132.7 $    33.6 $    50.9  $   30.6 $ 1,512.2
__________________________________________________________________________________________________
Less general portfolio
  loss reserve                                                                                58.5
__________________________________________________________________________________________________
   Adjusted total - Discontinued Operations, net of reserves                             $ 1,453.7
__________________________________________________________________________________________________
                                                                                         _________
<FN>

*  The general reserve at December 31, 1994 excluded reserves of approximately $208.5 million 
   related to experience rated products.  Had such reserves been included, the general reserve would 
   have been $500.0 million.  In connection with the company's adoption of FAS Nos. 114 and 118, 
   the general reserve at December 31, 1995 included such reserves, related to experience rated 
   products.  The inclusion of these reserves did not impact earnings or shareholders' equity.

</TABLE>

The company has a comprehensive process for managing mortgage 
loans which includes an ongoing risk assessment to evaluate key 
attributes of the mortgage investment, specifically, debt service 
coverage, cash flow sustainability, property condition, loan to 
value, market/economic trends, deal structure, borrower strength 
and ability to refinance.  Action plans are established with the 
objective of reducing potential risk and maximizing the return on 
the investment.  In addition, a collateral valuation is performed 
on a regular basis for mortgage loans with a balance greater than 
$5 million (approximately 90% of the total principal balance of 
the portfolios supporting continuing operations and Discontinued 
Operations), to help determine whether adjustments to impairment 
reserves are warranted.


<PAGE> 51

General Account Investments (Continued)

The company has a troubled debt restructuring program, the primary 
objective of which is to restructure eligible loans in a manner 
which creates a market rate transaction which will perform in 
accordance with its restructured terms.  The program is applied to 
those loans which have sound property and borrower fundamentals 
but suffer from excess debt.  An important feature of these loans 
is that in exchange for principal forgiveness on a portion of the 
loan, the company typically retains the right to participate in 
property appreciation to the extent market conditions improve in 
the future.

In those situations where the property fundamentals do not support 
a restructuring of the loan, the company generally acquires the 
collateral through foreclosure.  Loans with a principal balance of 
$309 million and collateral with a fair market value of 
$210 million (of which $9 million and $7 million, respectively, 
relates to loans supporting Discontinued Operations) were 
foreclosed upon in 1995.  Additional loans with a principal 
balance of $120 million ($19 million of which relates to loans 
supporting Discontinued Operations) were in the process of 
foreclosure at year end.  In certain cases, the company has taken 
substantive possession of the property supporting its loan, 
coupled with the borrower surrendering its interest in the future 
economic benefits in the property.  Where this has occurred, the 
loans are considered in-substance foreclosures, written down to 
their fair market value less selling costs and classified as real 
estate held for sale.  At December 31, 1995 and 1994, there were 
$190 million and $172 million, respectively, of in-substance 
foreclosures, (net of write-offs of $126 million and $126 million, 
respectively) in portfolios supporting continuing operations.  
Likewise, at December 31, 1995 and 1994 there were $54 million and 
$21 million, respectively, of in-substance foreclosures (net of 
write-offs of $65 million and $10 million, respectively) in 
portfolios supporting Discontinued Operations.


<PAGE> 52

General Account Investments (Continued)

Included in the company's total mortgage loan balances were the 
following categories of mortgage loans:

<TABLE>
<CAPTION>
(Millions)                                                     December 31, 1995                       
_______________________________________________________________________________________________________
                                                           Restructured      Potential
                                       Problem Loans       Loans             Problem Loans*    Total
                                       _____________       ____________      _____________     _____
<S>                                    <C>                 <C>               <C>               <C>
Total - continuing operations          $  160.3            $  514.1          $  839.1          $1,513.5
                                       ________            ________          ________          ________
                                       ________            ________          ________          ________

Percentage of total - continuing 
  operations:
  Supporting discontinued products         22.6%               50.9%             54.3%
  Supporting experience rated products     39.7                30.7              25.2
  Supporting remaining products            37.7                18.4              20.5
                                       ________            ________          ________
                                          100.0%              100.0%            100.0%
                                       ________            ________          ________ 
                                       ________            ________          ________ 
Impairment reserves on loans -
 continuing operations (1)                                                                     $  604.9
                                                                                               ________
                                                                                               ________
Impairment reserves as a percentage
 of total - continuing operations                                                                  40.0%
                                                                                               ________ 
                                                                                               ________ 

Total - Discontinued Operations        $   20.1            $   35.8          $   92.1          $  148.0
                                       ________            ________          ________          ________
                                       ________            ________          ________          ________

Impairment reserves on loans -
  Discontinued Operations                                                                      $   65.7
                                                                                               ________
                                                                                               ________
Impairment reserves as a percentage 
 of total - Discontinued Operations                                                                44.4%
                                                                                               ________ 
                                                                                               ________ 

                                                               December 31, 1994                       
                                       ________________________________________________________________
                                                           Restructured      Potential
                                       Problem Loans       Loans             Problem Loans*    Total
                                       _____________       ____________      _____________     _____
<S>                                    <C>                 <C>               <C>               <C>
Total - continuing operations          $  567.1            $  618.0          $  881.7          $2,066.8
                                       ________            ________          ________          ________
                                       ________            ________          ________          ________

Percentage of total - continuing
  operations:
  Supporting discontinued products         43.8%               44.6%             50.8%
  Supporting experience rated products     36.5                35.5              26.6
  Supporting remaining products            19.7                19.9              22.6
                                       ________            ________          ________
                                          100.0%              100.0%            100.0%
                                       ________            ________          ________ 
                                       ________            ________          ________ 
Impairment reserves on loans -
 continuing operations (1)                                                                     $  647.5**
                                                                                               ________  
                                                                                               ________  
Impairment reserves as a percentage
 of total - continuing operations                                                                  31.3%
                                                                                               ________ 
                                                                                               ________ 

Total - Discontinued Operations        $  106.0            $   88.1          $   37.0          $  231.1
                                       ________            ________          ________          ________
                                       ________            ________          ________          ________

Impairment reserves on loans -
 Discontinued Operations                                                                       $  136.6
                                                                                               ________
                                                                                               ________
Impairment reserves as a percentage 
 of total - Discontinued Operations                                                                59.1%
                                                                                               ________ 
                                                                                               ________ 
<FN>

(1) Please see Note 5 of Notes to Financial Statements for composition of impairment 
    reserves between specific and general impairment reserves.

*   In connection with the company's adoption of FAS Nos. 114 and 118 on January 1, 1995
    (please see Note 1 of Notes to Financial Statements), management has revised the 
    definition of "potential problem loans."  (Please see "potential problem loans"
    on page 54.)

**  The general reserve at December 31, 1994 excluded reserves of approximately 
    $208.5 million related to experience rated products.  Had such reserves been included, 
    total reserves would have been $856.0 million.  In connection with the company's adoption 
    of FAS Nos. 114 and 118, the general reserve at December 31, 1995 included such reserves, 
    related to experience rated products.  The inclusion of these reserves did not impact 
    earnings or shareholders' equity.
</TABLE>


<PAGE> 53

General Account Investments (Continued)

As of December 31, 1995 and 1994, the company's investments in 
problem, potential problem and restructured mortgage loans 
supporting continuing operations and Discontinued Operations by 
property type and geographic distribution were as follows:

<TABLE>
<CAPTION>

Problem, Potential Problem and Restructured     Geographic Distribution of Problem, Potential
Mortgage Loans by Property Type                 Problem and Restructured Mortgage Loans
                            
           Continuing        Discontinued                          Continuing    Discontinued
           Operations         Operations                           Operations     Operations_
_________________________________________       ____________________________________________ 

<S>            <C>           <C>                <C>                     <C>          <C>  
December 31, 1995:                              December 31, 1995:
__________________                              __________________

Agriculture     1.5%           -
Apartment       3.5%        13.3%               Middle Atlantic       15.5%         11.9%
Hotel/Motel     4.8%           -                New England           23.9%           .2%
Industrial      3.0%           -                North Central         10.3%         13.4%
Mixed Use       9.4%           -                Pacific and Mountain  27.8%         62.2%
Office         58.2%        48.8%               South Atlantic        11.0%         12.3%
Retail         15.0%        37.9%               South Central          7.2%            -
Other           4.6%           -                Non-U.S.               4.3%            -

December 31, 1994:                              December 31, 1994:
__________________                              __________________

Agriculture     1.1%           -
Apartment       5.3%         9.0%               Middle Atlantic       12.0%         22.1%
Hotel/Motel     8.8%          .8%               New England           21.7%          1.3%
Industrial      6.5%           -                North Central         17.0%         32.6%
Mixed Use       7.7%           -                Pacific and Mountain  25.6%          7.3%
Office         54.5%        72.4%               South Atlantic        16.6%         17.6%
Retail         13.4%        17.0%               South Central          4.7%         19.1%
Other           2.7%          .8%               Non-U.S.               2.4%            -
</TABLE>

"Problem loans" are defined to be loans with payments over 60 days 
past due, loans on properties in the process of foreclosure, loans 
on properties involved in bankruptcy proceedings and loans on 
properties subject to redemption.  Loans on properties in the 
process of foreclosure supporting continuing operations decreased 
to $101 million at December 31, 1995 from $364 million at 
December 31, 1994.  Likewise, loans on properties in the process 
of foreclosure supporting Discontinued Operations decreased to 
$19 million at December 31, 1995 from $58 million at December 31, 
1994.

"Restructured loans" are loans whose original contract terms have 
been modified to grant concessions to the borrower and are 
currently performing pursuant to such modified terms.  
Restructured mortgage loans within the total portfolio supporting 
continuing operations and Discontinued Operations at December 31, 
1995 and 1994 yielded cash returns of approximately 7% and 6%, 
respectively.


<PAGE> 54

General Account Investments (Continued)

Restructured loans that have a market rate of interest at the time 
of the restructure (which represents the interest rate the company 
would charge for a new loan with comparable risk) and demonstrate 
sustainable performance (as generally evidenced by six months of 
pre- or post-restructuring payment performance in accordance with 
the restructured terms) may be returned to performing status.  
Candidates for such treatment are re-underwritten and must meet 
specific guidelines which are intended to provide reasonable 
assurance that the loan will perform in accordance with its 
contract terms.  In addition, such restructured loans are designed 
to enhance the company's security position in the collateral, 
maximize borrower commitment to the property, and in many cases, 
ensure the company's participation in any appreciation of the 
property as market conditions improve.  During 1995 two loans in 
the continuing operations portfolio which had been restructured, 
with a carrying value of $17 million (net of write-offs of 
$6 million) and an average current yield of 8%, were classified as 
performing.  Likewise, during 1995 two loans in the Discontinued 
Operations portfolio which had been restructured, with a carrying 
value of $20 million (net of write-offs of $15 million) and an 
average current yield of 9%, were classified as performing.

In connection with the company's adoption of FAS Nos. 114 and 118 
on January 1, 1995 (please see Note 1 of Notes to Financial 
Statements), management has revised the definition of "potential 
problem loans" to include all loans which are performing pursuant 
to existing terms and are considered likely to become classified 
as problem or restructured loans.  Prior to January 1, 1995, 
potential problem loans were performing loans which management 
believed were likely to become classified as problem or 
restructured loans in the next 12 months or so.  As a result of 
the revised definition, potential problem loans at December 31, 
1995 supporting continuing operations and Discontinued Operations 
are approximately $293 million and $65 million, respectively, 
higher than they would have been had the definition not been 
changed.  Potential problem loans are identified through the 
portfolio review process on the basis of known information about 
the ability of borrowers to comply with present loan terms.  
Identifying such potential problem loans requires significant 
judgment as to likely future market conditions and developments 
specific to individual properties and borrowers.  Provision for 
losses that management believes are likely to arise from such 
potential problem loans is included in the specific impairment 
reserves.  (Please see Note 5 of Notes to Financial Statements for 
a discussion of mortgage loan impairment reserves.)


<PAGE> 55

General Account Investments (Continued)

The company does not accrue interest on problem loans or 
restructured loans when management believes the collection of 
interest is unlikely.  The amount of pretax investment income 
required by the original terms of such problem and restructured 
loans outstanding at December 31 and the portion thereof actually 
recorded as income for the years ended December 31 were as 
follows:

<TABLE>
<CAPTION>

(Millions)                             1995       1994       1993   
____________________________________________________________________
<S>                                    <C>        <C>        <C>
Income which would have been recorded 
 under original terms of loans - 
 continuing operations                 $  72.2    $ 127.2    $ 269.6
Income recorded                           42.4       64.5      133.9
                                       _______    _______    _______
Lost investment income - continuing 
 operations                            $  29.8    $  62.7    $ 135.7
                                       _______    _______    _______
                                       _______    _______    _______

Lost investment income allocated to
 investments supporting discontinued
 products (included above)             $  10.4    $  28.8    $  73.8
                                       _______    _______    _______
                                       _______    _______    _______

Lost investment income allocated to
 investments supporting experience
 rated pension products
 (included above)                      $  15.4    $  22.5    $  41.7
                                       _______    _______    _______
                                       _______    _______    _______

Lost investment income allocated to
 investments supporting remaining
 products (included above)             $   4.0    $  11.4    $  20.2
                                       _______    _______    _______
                                       _______    _______    _______

Lost investment income - Discontinued
 Operations                            $   2.2    $  13.9    $  13.5
                                       _______    _______    _______
                                       _______    _______    _______

</TABLE>


<PAGE> 56

General Account Investments (Continued)

Real Estate 

The company's equity real estate balances, net of write-downs and 
reserves, were as follows:

<TABLE>
<CAPTION>
(Millions)                                                   December 31, 1995                  
________________________________________________________________________________________________
                                       Investment               Properties          Total Equity
                                       Real Estate              Held for Sale       Real Estate 
                                       ___________              _____________       ____________
<S>                                    <C>                      <C>                 <C>
Total equity real estate - 
 continuing operations                 $  153.0                 $1,124.3 (1)        $1,277.3
                                       ________                 ________            ________
                                       ________                 ________            ________

Percentage of total equity real 
 estate - continuing operations:
  Supporting discontinued products          7.5%                    55.5%
  Supporting experience rated products      7.8                     24.4
  Supporting remaining products            84.7                     20.1
                                       ________                 ________
                                          100.0%                   100.0%
                                       ________                 ________ 
                                       ________                 ________ 
Total equity real estate -
 Discontinued Operations               $  106.8                 $  157.9 (1)        $  264.7
                                       ________                 ________            ________
                                       ________                 ________            ________



                                                             December 31, 1994                  
                                       _________________________________________________________
                                       Investment               Properties          Total Equity
                                       Real Estate              Held for Sale       Real Estate 
                                       ___________              _____________       ____________
<S>                                    <C>                      <C>                 <C>
Total equity real estate -
 continuing operations                 $  241.5                 $1,042.2 (1)        $1,283.7
                                       ________                 ________            ________
                                       ________                 ________            ________

Percentage of total equity real
 estate - continuing operations:
  Supporting discontinued products         37.6%                    61.3%
  Supporting experience rated products     13.2                     24.1
  Supporting remaining products            49.2                     14.6
                                       ________                 ________
                                          100.0%                   100.0%
                                       ________                 ________ 
                                       ________                 ________ 
Total equity real estate -
 Discontinued Operations               $  140.8                 $  121.2 (1)        $  262.0
                                       ________                 ________            ________
                                       ________                 ________            ________

<FN>
(1) Includes $190.4 million and $172.4 million of in-substance foreclosures supporting continuing 
    operations and $54.1 million and $21.0 million supporting Discontinued Operations at 
    December 31, 1995 and 1994, respectively.  (Please see "Mortgage Loans" on page 51 for 
    discussion of in-substance foreclosures.)

</TABLE>


<PAGE> 57

General Account Investments (Continued)

As of December 31, 1995 and 1994, the company's investments in 
equity real estate by property type and geographic distribution 
were as follows:

<TABLE>
<CAPTION>
Equity Real Estate by Property Type                Geographic Distribution of Equity Real Estate

           Continuing     Discontinued                                Continuing     Discontinued
           Operations     Operations                                  Operations     Operations
______________________________________             __________________________________________________
<S>            <C>          <C>                    <C>                   <C>           <C> 
December 31, 1995:                                 December 31, 1995:
__________________                                 __________________

Apartment       5.2%           -                   Middle Atlantic       11.1%          7.9%
Hotel/Motel     7.4%        21.3%                  New England            2.9%         12.5%
Industrial      4.4%         8.6%                  North Central         16.1%         18.3%
Land            1.2%        14.3%                  Pacific and Mountain  20.7%         37.9%
Mixed Use       2.1%           -                   South Atlantic        29.0%         16.7%
Office         60.8%        47.1%                  South Central          8.2%          6.7%
Retail         16.0%         7.6%                  Non-U.S.              12.0%            -
Other           2.9%         1.1%

December 31, 1994:                                 December 31, 1994:
__________________                                 __________________

Apartment       7.4%         6.0%                  Middle Atlantic        8.1%          8.2%
Hotel/Motel     7.8%        17.3%                  New England            9.0%         16.1%
Industrial      3.8%         8.7%                  North Central         12.3%         12.3%
Land            2.5%        13.2%                  Pacific and Mountain  16.9%         40.1%
Mixed Use       2.5%           -                   South Atlantic        31.7%         20.4%
Office         54.2%        44.1%                  South Central         11.8%          2.9%
Retail         20.2%         9.5%                  Non-U.S.              10.2%            -
Other           1.6%         1.2%
</TABLE>

All real estate acquired through foreclosure, including in-
substance foreclosures, is classified as properties held for sale. 
Foreclosed real estate supporting continuing operations was 
carried at 61% of the company's cash investment (unpaid mortgage 
balance plus capital additions) at December 31, 1995 and 1994.  
Likewise, foreclosed real estate of Discontinued Operations was 
carried at 53% and 49% of the company's cash investment at 
December 31, 1995 and 1994, respectively.

Investment real estate, which is generally carried at depreciated 
cost, is written down to fair value to reflect other than 
temporary declines in market value.  The fair value of assets 
acquired through foreclosure is established as the cost basis at 
the time of foreclosure.  Subsequent to acquisition, properties 
classified as held for sale are carried at the lower of cost or 
fair value less estimated selling costs.  Adjustments to the 
carrying value of properties held for sale resulting from changes 
in fair value are recorded in a valuation reserve.  Property 
valuations are reviewed regularly by investment management. 
Capital additions and asset improvements increase the cost basis 
of the asset while depreciation reduces the cost basis.


<PAGE> 58

General Account Investments (Continued)

Total real estate write-downs and valuation reserves on properties 
included in the company's equity real estate balances at 
December 31 were as follows:

<TABLE>
<CAPTION>

(Millions)                             1995          1994    
_____________________________________________________________

<S>                                    <C>           <C>
Allocable to discontinued products     $  381.0      $  376.0
Allocable to experience rated products    208.2         179.6
                                                             
Allocable to remaining products            96.8          89.0
_____________________________________________________________
   Total real estate write-downs and
    valuation reserves - continuing
                                   
    operations                         $  686.0      $  644.6
_____________________________________________________________
                                       ______________________

Real estate write-downs and valuation
    reserves - Discontinued Operations $  131.5      $  117.6
_____________________________________________________________
                                       ______________________

</TABLE>

For the years ended December 31, total after-tax net realized 
capital (gains) losses from real estate write-downs and changes in 
the valuation reserves were as follows:

<TABLE>
<CAPTION>

(Millions)                             1995        1994        1993  
_____________________________________________________________________

<S>                                    <C>         <C>         <C>
Allocable to discontinued products     $ 30.9 (1)  $ 12.8 (1)  $ 55.1
Allocable to experience rated
  products (2)                            5.1         2.9        51.5
Allocable to remaining products           2.2        (3.0)       31.4
_____________________________________________________________________
  Total after-tax net realized
    capital losses - 
    continuing operations              $ 38.2      $ 12.7      $138.0
_____________________________________________________________________
                                       ______________________________

Total after-tax net realized
 capital (gains) losses -
 Discontinued Operations               $(10.6) *   $  2.2      $ 33.1
_____________________________________________________________________
                                       ______________________________
<FN>

(1) Write-downs and impairment expense allocable to discontinued products for the years
    ended December 31, 1995 and 1994 were charged against the reserve for future losses 
    and did not affect the company's results of operations.

(2) Write-downs and impairment expense allocable to experience rated products do not affect
    the company's results of operations.

* Includes a $12.8 million realized capital gain related to the reversal of valuation 
  reserves on a foreclosed property that appreciated in value.
</TABLE>


<PAGE> 59

General Account Investments (Continued)

Use of Derivatives and Other Investments

The company's use of derivatives is limited to hedging activity and has 
principally consisted of using futures, forward contracts and 
interest rate swaps to hedge interest rate risk and currency risk.  
These instruments, viewed separately, subject the company to 
varying degrees of market and credit risk.  However, when used for 
hedging, the expectation is that these instruments would reduce 
overall market risk.  Market risk is the possibility that future 
changes in market prices may decrease the market value of one or 
all of these financial instruments.  Credit risk arises from the 
potential inability of counterparties to perform under the terms 
of the contracts.  Management does not believe that the current 
level of hedging activity will have a material effect on the 
company's liquidity or results of operations.  (Please see Note 16 
of Notes to Financial Statements for a discussion of the company's 
hedging activities.)

The company also had investments in certain debt instruments with 
derivative characteristics, including those where market value is 
at least partially determined by, among other things, levels of or 
changes in domestic and/or foreign interest rates (short term or 
long term), exchange rates, prepayment rates, equity markets or 
credit ratings/spreads.  The amortized cost and fair value of 
these securities, included in the debt securities portfolios 
supporting continuing operations and Discontinued Operations, as 
of December 31, 1995 was as follows:

<TABLE>
<CAPTION>
                                                  Continuing                Discontinued      
                                                  Operations                 Operations   
                                            ______________________     _______________________
                                            Amortized       Fair       Amortized        Fair  
(Millions)                                    Cost          Value        Cost           Value_
______________________________________________________________________________________________
<S>                                         <C>          <C>           <C>           <C>
Collateralized mortgage obligations:        $ 2,876.1    $ 3,082.8     $   304.4     $   306.0
  Principal-only strips (included above)         38.7         50.0             -             -
  Interest-only strips (included above)          11.9         21.3             -             -
Structured notes (1)                             95.0        100.3             -             -
Warrants to purchase debt securities (2)          2.8          4.5             -             -

<FN>
(1) Represents nonleveraged instruments whose fair values and credit risk are
    based on underlying securities, including fixed-income securities and 
    interest rate swap agreements.

(2) Represents the right to purchase specific debt securities and is accounted
    for as a hedge.  Upon exercise, the cost of the warrants will be added to the
    basis of the debt securities purchased and amortized over their lives.

</TABLE>

<PAGE> 60

General Account Investments (Continued)

Outlook

Management intends that continuing operations general account 
investments in new mortgage loans for the foreseeable future will 
be restricted largely to extending and refinancing existing 
mortgages as they mature.  (Please see "Liquidity and Capital 
Resources" on page 62.)  It is management's objective over the 
next several years, real estate and capital market conditions 
permitting, to continue to reduce the size and the risk of the 
mortgage loan and real estate portfolios relative to total 
invested general account assets.  Although extensions and 
refinancings of existing mortgage loans may delay achieving this 
objective, management intends to pursue plans to reduce risk, 
maximize returns and reduce portfolio levels.

Management is seeing improvement in certain segments of the 
commercial real estate market.  While additional losses may emerge 
in the company's mortgage loan and real estate portfolios, and may 
increase to the extent recovery in this market is delayed, 
management believes that the improvement in this market will 
favorably impact real estate values.

The reserve for discontinued products reflects all anticipated 
future losses on discontinued products, including capital losses 
relating to the $4.0 billion of mortgage loans and real estate 
supporting such products.  Therefore, additional losses on the 
portion of the portfolio supporting discontinued products are not 
expected to impact the company's results of operations, although 
there can be no assurances that such losses will not be greater 
than anticipated and thus materially impact such results.  (Please 
see "Discontinued Products" on page 23.)

During 1995, Discontinued Operations began to sell equity 
securities primarily in an effort to reduce volatility in 
statutory surplus and increase income.  Such sales were increased 
in connection with the anticipated sale of the company's property-
casualty operations.  The company intends to continue to reduce 
the equity portfolio through the closing date of the sale of the 
property-casualty operations through a combination of sales, 
including the sale of a significant portion of its holdings in 
MBIA Inc. to the public, and transfers to continuing operations.


<PAGE> 61

Liquidity and Capital Resources

<TABLE>
<CAPTION>
(Millions)                             1995       1994        1993
______________________________________________________________________
<S>                                   <C>        <C>         <C>
Consolidated Assets (1)               $84,323.7  $75,486.7   $81,572.8
______________________________________________________________________
                                      ________________________________

Shareholders' Equity                  $ 7,272.8  $ 5,503.0   $ 7,043.1
______________________________________________________________________
                                      ________________________________

Cash and Cash Equivalents
and Short-Term Investments (2)        $ 2,320.5  $ 2,621.6   $ 2,096.5
______________________________________________________________________
                                      ________________________________

Minority Interest in 
Preferred Securities 
of Subsidiary                         $   275.0  $   275.0   $       -
______________________________________________________________________
                                      ________________________________
    
____
Long-Term Debt (2)                    $   989.1  $ 1,079.2   $ 1,112.2
______________________________________________________________________
                                      ________________________________

Average Short-Term Debt (2)           $    96.0  $   213.7   $   205.5
______________________________________________________________________
                                      ________________________________

Interest Expense (2)                  $   115.9  $    98.6   $    77.4
______________________________________________________________________
                                      ________________________________

<FN>
(1)  Includes net assets of Discontinued Operations of $3,932.8 million, 
     $3,167.3 million and $3,873.0 million in 1995, 1994 and 1993, respectively.

(2)  Excludes Discontinued Operations.
</TABLE>

Liquidity needs of the company's businesses have generally been 
met by cash provided by premiums, deposits, asset maturities and 
income received on investments.  Cash provided from these sources 
is used primarily for claim and benefit payments, fund withdrawals 
and operating expenses.

Please see "Large Case Pensions" on pages 20 through 26 for a 
discussion of the liquidity requirements specific to the large 
case pension business.  The following discussion addresses the 
sources of liquidity available to meet the needs of all of the 
company's continuing businesses.

Bonds, redeemable preferred stocks and mortgage loans have 
durations that were selected to approximate the durations of the 
liabilities they support.  The duration of these investments is 
monitored, and investment purchases and sales are executed with 
the objective of having adequate funds available to satisfy the 
company's maturing liabilities.

As the company's investment strategy focuses on matching asset and 
liability durations, and not specific cash flows, and 
additionally, since these duration assessments are dependent on 
numerous cash flow assumptions, asset sales may be required, from 
time to time, to satisfy liability obligations and/or rebalance 
asset portfolios.  The investment portfolios are closely monitored 
to assess asset and liability matching in order to rebalance the 
portfolios as conditions warrant.

As a result of the addition by the company of $750 million 
($488 million, after tax) to the environmental-related claims 
reserves in the second quarter of 1995, the company contributed 
$303 million of additional capital to its Discontinued Operations 
in the fourth quarter of 1995 in order to restore capital levels 
(including risk-based capital), to appropriate levels for 
regulatory and other purposes.  The funding for such capital 
contributions was obtained through short-term parent company 
borrowings.


<PAGE> 62

Liquidity and Capital Resources (Continued)

The company has significant short-term liquidity supporting its 
businesses.  At year-end 1995, cash and cash equivalents 
supporting continuing operations and Discontinued Operations were 
$1.7 billion and $1.2 billion, respectively, and short-term 
securities were $.6 billion and $.1 billion, respectively.

Given the high quality of the total debt securities portfolio 
supporting continuing operations and Discontinued Operations 
(please see "General Account Investments" on page 45), management 
expects the vast majority of the company's investments in debt 
securities to be repaid in accordance with contractual terms.  In 
addition, the mortgage-backed securities, treasuries and public 
bonds included within the debt securities portfolio are highly 
marketable and thus can be used to enhance cash flow before 
maturity.

At December 31, 1995 and 1994, approximately 91% of the 
outstanding principal balance of the total mortgage loan portfolio 
consisted of commercial loans with balloon maturity features.  The 
company has extended the maturity of, and adjusted interest rates 
to current market on, certain maturing mortgage loans where the 
borrower was unable to obtain financing elsewhere due to tight 
lending practices by banks and other financial institutions over 
the past several years.  In 1995 the mortgage loan portfolio 
generated $2.3 billion in cash ($346 million of which relates to 
Discontinued Operations) which included $805 million of payoffs or 
39% of scheduled combined maturities ($154 million of which 
relates to Discontinued Operations), $732 million of prepayments 
($149 million of which relates to Discontinued Operations), 
$601 million of loan sales ($29 million of which relates to 
Discontinued Operations) and $181 million of amortization 
($14 million of which relates to Discontinued Operations).  
Despite various indications that liquidity has returned to certain 
real estate markets, the company expects it will continue to 
extend or refinance maturing loans.

At December 31, 1995, scheduled mortgage loan principal repayments  
were as follows:

<TABLE>
<CAPTION>
                                Continuing        Discontinued
(Millions)                      Operations         Operations
______________________________________________________________
<S>               <C>           <C>               <C>
                  1996          $1,509.5          $136.5
                  1997           1,133.9           108.7
                  1998             822.9            61.5
                  1999           1,019.5           344.8
                  2000           1,282.1           250.4
            Thereafter           3,155.6           225.3

</TABLE>


<PAGE> 63

Liquidity and Capital Resources (Continued)

Consolidated Cash Flows

<TABLE>
<CAPTION>
(Millions)                           1995         1994          1993       
___________________________________________________________________________
<S>                                  <C>          <C>           <C>
Net cash provided by (used for)
 operating activities:
   Continuing Operations             $    647.7   $    840.8    $    (160.2)
                                     ______________________________________ 
                                     ______________________________________ 
   Discontinued Operations           $    688.7   $   (586.7)   $  (1,027.0)
                                     ______________________________________ 
                                     ______________________________________ 
Net cash provided by (used for)
 investing activities:
   Continuing Operations             $    381.8   $  1,416.0    $     204.6
                                     ______________________________________
                                     ______________________________________
   Discontinued Operations           $   (461.4)  $  1,342.7    $     592.1
                                     ______________________________________
                                     ______________________________________
Net cash provided by (used for)
 financing activities:
   Continuing Operations             $ (1,596.0)  $ (1,529.0)   $    (382.2)
                                     ______________________________________ 
                                     ______________________________________ 
   Discontinued Operations           $    250.5   $    (84.0)   $     (73.0)
                                     ______________________________________ 
                                     ______________________________________ 
Cash and cash equivalents:
   Continuing Operations             $  1,712.7   $  2,277.2    $   1,553.6
                                     ______________________________________
                                     ______________________________________
   Discontinued Operations           $  1,153.6   $    676.4    $       4.2
                                     ______________________________________
                                     ______________________________________
</TABLE>

The company's cash flow requirements for 1995 were met by funds 
provided from operations, from the maturity and sale of 
investments and from financing activities.  

Net cash provided by (used for) operating activities related to 
continuing operations included $880 million used for net purchases 
of debt trading securities in 1993.

Net cash provided by investing activities related to continuing 
operations included $2,048 million, $2,359 million and 
$2,617 million from net sales, including a securitization in 1995, 
as well as maturities and repayments of mortgage loans and real 
estate in 1995, 1994 and 1993, respectively.

Net cash used for financing activities related to continuing 
operations during 1995 included a $303 million capital 
contribution to Discontinued Operations.  Please see "Liquidity 
and Capital Resources" on page 61 for a further discussion of the 
capital contribution.  Net cash used for financing activities also 
includes cash generated by sales of investment contracts which was 
lower in 1995, 1994 and 1993 than cash paid for maturing 
investment contracts and other withdrawals.  In 1995, 1994 and 
1993, the company paid annual dividends to shareholders of $2.76 
per share (approximately $315 million in 1995).  (Please see 
"Parent Company Cash Flow" on page 65 and "Debt and Short-Term 
Borrowing" on page 66.)


<PAGE> 64

Liquidity and Capital Resources (Continued)

Net cash provided by (used for) operating activities related to 
Discontinued Operations included $1,209 million used for net 
purchases of debt trading securities in 1993.

Net cash provided by (used for) investing activities related to 
Discontinued Operations included $1,164 million from increases in 
debt securities in 1995, $617 million from decreases in debt 
securities in 1994 and $232 million from net sales, as well as 
maturities and repayments of mortgage loans and real estate in 
1993.

Net cash provided by (used for) financing activities related to 
Discontinued Operations during 1995 included a $303 million 
infusion of capital from continuing operations.

Sale of Property-Casualty Operations

The sale of the property-casualty operations to The Travelers 
Insurance Group Inc. is expected to close no later than midyear 
1996.  The expected net proceeds of approximately $4.0 billion 
from this sale are expected to be utilized primarily to support 
the company's strategic initiatives.

The agreement to sell the property-casualty operations prohibits 
the payment of further cash dividends from the property-casualty 
businesses to the parent company, Aetna Life and Casualty Company, 
although the effect of such prohibition is not expected to be 
material to the company's liquidity position.

Other Factors Affecting Cash Flow

Cash flow may be influenced by general economic conditions, 
including general interest rate levels, investment returns, 
competition for business, and the perceived financial strength of 
the company.  Financial strength is significant because of 
questions about insurers' asset quality and the well-publicized 
insolvencies of certain insurers.  Adverse changes in, among other 
factors, claims-paying ratings, general economic conditions, or 
overall customer confidence have the effect of decreasing new 
sales and deposits and increasing withdrawals and surrenders.  
Additionally, lower debt and commercial paper ratings may 
adversely affect the availability and cost of certain external 
funding sources.


<PAGE> 65

Liquidity and Capital Resources (Continued)

During 1995 and 1994, ratings of Aetna Life and Casualty Company 
and certain of its subsidiaries were lowered by certain of the 
rating agencies.  Aetna's ratings at February 7, 1995 and at 
February 6, 1996 follow:

<TABLE>
<CAPTION>
                                                    Rating Agencies                      
                             ____________________________________________________________
                                                             Moody's Investors   Standard
                             A.M. Best      Duff & Phelps        Service         & Poor's
                             ____________________________________________________________
<S>                               <C>       <C>                  <C>             <C>
Aetna Life and Casualty Company
  (senior debt)
    February 7, 1995              *         A+                   A2              A+
    February 6, 1996              *         A ***                A2              A- ***

Aetna Life and Casualty Company
  (commercial paper)
    February 7, 1995              *         D-1                  P-1             A-1
    February 6, 1996              *         D-1 ***              P-1             A-2 ***

Aetna Life Insurance Company
  (claims paying)
    February 7, 1995              A         AA  ****             Aa3             A+
    February 6, 1996              A         AA- ***              Aa3             A+ ***

Aetna Life Insurance and Annuity Company
  (claims paying)
    February 7, 1995              A++       AA+                  Aa2             AA
    February 6, 1996              A+        AA+                  Aa2             AA ***

The Aetna Casualty and Surety Company
  (claims paying)
    February 7, 1995              A-        AA-                  A1              A+
    February 6, 1996              A-        A+                   A1              A

Aetna Casualty and Surety Company of America
  (claims paying)
    February 7, 1995              A         **                   **              **
    February 6, 1996              A         **                   **              **

<FN>

*    Not rated by the agency.
**   Not rated on a separate company basis.
***  On rating watch-up or credit watch with positive implications.
**** On rating watch-down.

</TABLE>

Parent Company Cash Flow

Cash flow needs at the parent company level include primarily 
shareholder dividends and debt service.  The Board of Directors 
("the Board") reviews the company's common stock dividend each 
quarter.  Among the factors considered by the Board are the 
company's results of operations, and the capital requirements, 
growth and other characteristics of its businesses.  The parent 
company also may fund growth or meet capital needs of the 
company's businesses.  Such parent company cash flow needs 
historically have been met, in large part, through a combination 
of borrowings and dividends from operating subsidiaries.  As a 
matter of course, the company monitors existing and alternative 
financing sources to support the parent company's capital and 
liquidity needs including, but not limited to, debt issuance, 
preferred stock issuance, intercompany borrowings and pledging or 
selling of assets.  The sale of the property-casualty operations 
is expected to generate substantial cash which will be available 
for investment in one or more of the remaining businesses.  
Efforts to simultaneously grow certain of the company's remaining 
businesses to their full potential and meet capital requirements 
of other businesses may require significant future capital.


<PAGE> 66

Liquidity and Capital Resources (Continued)

Should significant cash flow reductions occur in any of the 
company's businesses, for any combination of the reasons discussed 
above, the company has several alternatives for meeting its cash 
requirements.  These include, among other things, selling or 
pledging public bond investments or other assets, borrowing among 
affiliates and using external borrowing or other capital-raising 
capacity.

The company has credit facilities aggregating $1 billion with a 
group of worldwide banks.  One $500 million facility terminates in 
July 1996. Another $500 million facility terminates in July 1999. 
The company intends to obtain an extension of the facility that 
terminates in July 1996.  (Please see Note 9 of Notes to Financial 
Statements.)

The company has agreed with Travelers Group Inc. to invest up to 
$200 million in a potential offering of common stock in a new 
property-casualty entity to be established by Travelers Group Inc.

Minority Interest in Preferred Securities of Subsidiary

On November 22, 1994, Aetna Capital L.L.C. ("ACLLC"), a subsidiary 
of the company, issued $275 million (11,000,000 shares) of 9 1/2% 
cumulative monthly income preferred securities. ACLLC loaned the 
proceeds from the preferred stock issuance to the company.  The 
company used the proceeds of the loan for general corporate 
purposes.  (Please see Note 11 of Notes to Financial Statements.)

Debt and Short-Term Borrowing

Long-term debt of continuing operations at December 31, 1995 was 
approximately $1.0 billion, of which $66 million was attributable 
to the company's international subsidiaries.

Pursuant to shelf registration statements declared effective by 
the Securities and Exchange Commission, the company may offer and 
sell up to an additional $550 million of various types of 
securities, and ACLLC may offer and sell up to an additional 
$225 million of preferred securities.

Short-term borrowing through commercial paper and other markets is 
used to fund interim cash requirements.  Funding interim cash 
requirements with short-term borrowing allows funds that support 
the insurance lines to remain invested at higher rates, thus 
benefiting the company's earnings.

Treasury Stock

The company issued 1,994,935 shares, 457,191 shares and 1,930,085 
shares of treasury stock for benefit plans in 1995, 1994 and 1993, 
respectively.  In 1995, 1994 and 1993, the company did not acquire 
any shares of its common stock.


<PAGE> 67

Liquidity and Capital Resources (Continued)

Dividend Restrictions

Because Aetna Life and Casualty Company is a Connecticut insurance 
company, the amount of dividends that it may pay to shareholders 
in 1996 without prior approval by the Insurance Commissioner of 
the State of Connecticut is $660 million.  Dividend payments by 
the domestic insurance subsidiaries to Aetna Life and Casualty 
Company are subject to similar restrictions in Connecticut and 
other states, and are limited in 1996 to approximately 
$657 million ($217 million of which relates to Discontinued 
Operations) in the aggregate.

Please see "Sale of Property-Casualty Operations" on page 64 for 
additional discussions regarding dividend restrictions.

Regulatory Environment

Solvency Regulation

In recent years, state insurance regulators have been considering 
changes in statutory accounting practices and other initiatives to 
strengthen solvency regulation.  The National Association of 
Insurance Commissioners ("NAIC") has adopted risk-based capital 
("RBC") standards for both life and property-casualty insurers.  
The RBC formula is a regulatory tool designed to identify weakly 
capitalized companies by comparing the adjusted surplus to the 
required surplus, which reflects the risk profile of the company 
(RBC ratio).  Within certain ratio ranges, regulators have 
increasing authority to take action as the RBC ratio decreases.  
There are four levels of regulatory action ranging from requiring 
insurers to submit a comprehensive plan (an RBC plan) to the state 
insurance commissioner to when the state insurance commissioner 
places the insurer under regulatory control.  The RBC ratio for 
each of the company's primary insurance subsidiaries as measured 
at December 31, 1995 was significantly above the levels which 
would require regulatory action.  Rating agencies also use their 
own risk-based capital standards as part of determining a 
company's rating.

The NAIC also is considering several other solvency-related 
regulations including risk-based capital standards for HMOs and 
the development of a model investment law and amendments to the 
model insurance holding company law which would limit types and 
amounts of investments by insurance companies.  In addition, in 
recent years there has been growing interest among certain members 
of Congress concerning possible federal roles in the regulation of 
the insurance industry.  Because these other initiatives are in a 
preliminary stage, management cannot assess the potential impact 
of their adoption on the company.


<PAGE> 68

Regulatory Environment (Continued)

Federal Employee Benefit Regulation

The company provides a variety of products and services to 
employee benefit plans that are covered by the Employee Retirement 
Income Security Act of 1974 ("ERISA").

In December 1993, in a case involving an employee benefit plan and 
an insurance company, the United States Supreme Court ruled that 
assets in the insurance company's general account that were 
attributable to the non-guaranteed portion of a group pension 
contract issued to the plan were "plan assets" for purposes of 
ERISA and that the insurance company was an ERISA fiduciary with 
respect to those assets.  In reaching its decision, the Court 
declined to follow a 1975 Department of Labor ("DOL") interpretive 
bulletin that had suggested that insurance company general account 
assets were not plan assets.

The company and other insurers are seeking clarification from the 
DOL of the effects, if any, of the decision on their businesses, 
as well as pursuing clarification of the decision through Federal 
legislation.  Management is not currently able to predict how the 
decision, or the outcome of any legislative or regulatory 
initiatives, will ultimately affect its businesses.

New Accounting Pronouncements

Please see Notes 1 and 2 of Notes to Financial Statements for a 
discussion of recently issued accounting pronouncements.

Forward-Looking Information

The Private Securities Litigation Reform Act of 1995 ("the Act") 
provides a "safe harbor" for forward-looking statements to 
encourage companies to provide prospective information about their 
companies, so long as those statements are identified as forward-
looking and are accompanied by meaningful cautionary statements 
identifying important factors that could cause actual results to 
differ materially from those discussed in the statement.  The 
company desires to take advantage of the "safe harbor" provisions 
of the Act.  Certain information contained herein, particularly 
the information appearing under the heading "Outlook" contained in 
the discussion of results of operations of the company's business 
segments, is forward-looking.  Information regarding certain 
important factors that could cause actual results of operations or 
outcomes of other events to differ materially from any such 
forward-looking statement appear together with such statement, 
and/or elsewhere herein.  Information regarding additional factors 
that may affect such statements appears in the company's 1995 
Annual Report on Form 10-K filed with the Securities and Exchange 
Commission (see Item 1-Business, including descriptions of the 
company's business segments and "Other Matters - Regulation" in 
the Form 10-K).

<PAGE> 69

Management's Responsibility for Financial Statements

Management is responsible for the financial statements of Aetna 
Life and Casualty Company, which have been prepared in accordance 
with generally accepted accounting principles.  The financial 
statements are the product of a number of processes that include 
the gathering of financial data developed from the records of the 
company's day-to-day business transactions.  Informed judgments 
and estimates are used for those transactions not yet complete or 
for which the ultimate effects cannot be measured precisely.  The 
company emphasizes the selection and training of personnel who are 
qualified to perform these functions.  In addition, company 
personnel are subject to rigorous standards of ethical conduct 
that are widely communicated throughout the organization.

The company's internal controls are designed to reasonably assure 
that company assets are safeguarded from unauthorized use or 
disposition and that company transactions are authorized, executed 
and recorded properly.  Company personnel maintain and monitor 
these internal controls on an ongoing basis.  In addition, the 
company's internal auditors review and report upon the functioning 
of these controls with the right of full access to all company 
personnel.

The company engages KPMG Peat Marwick LLP as independent auditors 
to audit its financial statements and express their opinion 
thereon.  Their audits include reviews and tests of the company's 
internal controls to the extent they believe necessary to 
determine and conduct the audit procedures that support their 
opinion.  Members of that firm also have the right of full access 
to each member of management in conducting their audits.  The 
report of KPMG Peat Marwick LLP appears on page 123.

Aetna's Board of Directors has an Audit Committee composed solely 
of independent directors.  The committee meets periodically with 
management, the internal auditors and KPMG Peat Marwick LLP to 
oversee and monitor the work of each and to inquire of each as to 
their assessment of the performance of the others in their work 
relating to the company's financial statements.  Both the 
independent and internal auditors have, at all times, the right of 
full access to the Audit Committee, without management present, to 
discuss any matter they believe should be brought to the attention 
of the committee.


<PAGE> 70

Consolidated Statements of Income

For the years ended December 31,

<TABLE>
<CAPTION>

(Millions, except share and per share data)       1995              1994              1993       
_________________________________________________________________________________________________
<S>                                               <C>               <C>               <C>
Revenue:

Premiums                                          $  7,431.4        $  6,901.3        $  5,921.7
Net investment income                                3,575.1           3,631.4           3,966.6
Fees and other income                                1,924.3           1,741.5           1,512.6
Net realized capital gains (losses)                     47.2             (55.2)            (61.2)
                                                  _______________________________________________

Total revenue                                       12,978.0          12,219.0          11,339.7 
_________________________________________________________________________________________________

Benefits and Expenses:

Current and future benefits                          9,027.2           8,652.0           8,189.2
Operating expenses                                   3,087.5           2,805.9           2,632.8
Amortization of deferred policy
 acquisition costs                                     137.1             133.6             101.7
Loss on discontinuance of products                         -                 -           1,270.0
Severance and facilities charge                            -                 -             160.7 
                                                  _______________________________________________

Total benefits and expenses                         12,251.8          11,591.5          12,354.4 
_________________________________________________________________________________________________

Income (Loss) from continuing operations
 before income taxes, extraordinary item
 and cumulative effect adjustments                     726.2             627.5          (1,014.7)

Income taxes (benefits)                                252.3             218.1            (412.4)
                                                  _______________________________________________

Income (Loss) from continuing operations
 before extraordinary item and
 cumulative effect adjustments                         473.9             409.4            (602.3)
Income (Loss) from Discontinued Operations, 
 net of tax                                           (222.2)             58.1             290.3 
                                                  _______________________________________________

Income (Loss) before extraordinary item
 and cumulative effect adjustments                     251.7             467.5            (312.0)
Extraordinary loss on debenture redemption,
 net of tax                                                -                 -              (4.7)
Cumulative effect adjustments, net of tax                  -                 -             (49.2)
                                                  _______________________________________________

Net income (loss)                                 $    251.7        $    467.5        $   (365.9)
                                                  _______________________________________________
                                                  _______________________________________________

Results Per Common Share:

Income (Loss) from continuing operations
 before extraordinary item and
 cumulative effect adjustments                    $     4.16        $     3.63        $    (5.42)
Income (Loss) from Discontinued Operations, 
 net of tax                                            (1.95)              .51              2.61 
                                                  _______________________________________________

Income (Loss) before extraordinary item
 and cumulative effect adjustments                      2.21              4.14             (2.81)
Extraordinary loss on debenture redemption,
 net of tax                                                -                 -              (.04)
Cumulative effect adjustments, net of tax                  -                 -              (.44)
                                                  _______________________________________________

Net income (loss)                                 $     2.21        $     4.14        $    (3.29)
_________________________________________________________________________________________________
                                                  _______________________________________________


Weighted average common shares outstanding       113,897,633       112,848,653       111,062,954 
_________________________________________________________________________________________________
<FN>

See Notes to Financial Statements.
</TABLE>


<PAGE> 71

Consolidated Balance Sheets

As of December 31,

<TABLE>
<CAPTION>
(Millions, except share and per share data)           1995             1994       
__________________________________________________________________________________
<S>                                                   <C>              <C>
Assets:
Investments:
 Debt securities:
    Available for sale, at fair value
      (amortized cost $29,962.5 and $27,208.3)        $  31,860.3      $  25,938.1
    Held for investment, at amortized cost
      (fair value $1,584.1)                                     -          1,587.3
 Equity securities, at fair value (cost $597.8
  and $594.0)                                               659.7            614.6
 Short-term investments                                     607.8            344.4
 Mortgage loans                                           8,327.2         10,389.9
 Real estate                                              1,277.3          1,283.7
 Policy loans                                               629.4            533.8
 Other                                                      688.6            838.0
                                                      ____________________________
Total investments                                        44,050.3         41,529.8
__________________________________________________________________________________

 Cash and cash equivalents                                1,712.7          2,277.2
 Reinsurance recoverables and receivables                   109.4            129.4
 Accrued investment income                                  618.3            596.8
 Premiums due and other receivables                         971.5            593.7
 Deferred federal and foreign income taxes                  271.5            404.2
 Deferred policy acquisition costs                        1,953.1          1,691.0
 Other assets                                             1,004.4            974.7
 Separate Accounts assets                                29,699.7         24,122.6
                                                                                  
 Net assets of Discontinued Operations                    3,932.8          3,167.3
                                                      ____________________________
Total assets                                          $  84,323.7      $  75,486.7
__________________________________________________________________________________
__________________________________________________________________________________

Liabilities:
 Future policy benefits                               $  18,372.9      $  17,971.5
 Unpaid claims and claim expenses                         1,563.1          1,389.4
 Unearned premiums                                          142.4            179.4
 Policyholders' funds left with the company              22,898.7         23,176.4
                                                      ____________________________
Total insurance liabilities                              42,977.1         42,716.7

 Dividends payable to shareholders                           79.2             77.7
 Short-term debt                                            389.6             14.8
 Long-term debt                                             989.1          1,079.2
 Current federal and foreign income taxes                   154.0              4.2
 Other liabilities                                        2,344.2          1,642.0
 Participating policyholders' interests                     204.8            170.5
 Separate Accounts liabilities                           29,637.9         24,003.6
                                                      ____________________________
Total liabilities                                        76,775.9         69,708.7
__________________________________________________________________________________

Minority interest in preferred securities 
  of subsidiary                                             275.0            275.0
__________________________________________________________________________________

Commitments and Contingent Liabilities
 (Notes 2, 16 and 17)

Shareholders' Equity:
 Class A Voting Preferred Stock (no par value;
  10,000,000 shares authorized; no shares
  issued or outstanding)                                        -                -
 Class B Voting Preferred Stock (no par value;
  15,000,000 shares authorized; no shares
  issued or outstanding)                                        -                -
 Class C Non-Voting Preferred Stock (no par value;
  15,000,000 shares authorized; no shares 
  issued or outstanding)                                        -                -
 Common Capital Stock (no par value; 250,000,000
  shares authorized; 115,013,675 and 114,939,275 issued, 
  and 114,727,093 and 112,657,758 outstanding)            1,448.2          1,419.2
 Net unrealized capital gains (losses)                      641.1         (1,071.5)
 Retained earnings                                        5,195.6          5,259.6
 Treasury stock, at cost (286,582 and
  2,281,517 shares)                                         (12.1)          (104.3)
                                                      ____________________________ 
Total shareholders' equity                                7,272.8          5,503.0
__________________________________________________________________________________

Total liabilities, minority interest and
  shareholders' equity                                $  84,323.7      $  75,486.7
__________________________________________________________________________________
__________________________________________________________________________________

Shareholders' equity per common share                 $     63.39      $     48.85
__________________________________________________________________________________
__________________________________________________________________________________
<FN>
See Notes to Financial Statements.
</TABLE>

<PAGE> 72

Consolidated Statements of Shareholders' Equity

<TABLE>
<CAPTION>

                                                                 Net
                                                                 Unrealized
Three Years Ended December 31, 1995                   Common     Capital        Retained     Treasury
(Millions, except share data)            Total        Stock      Gains (Losses) Earnings     Stock    
______________________________________________________________________________________________________
<S>                                      <C>          <C>        <C>            <C>          <C>

Balances at December 31, 1992            $ 7,238.3    $ 1,417.7  $   259.6      $ 5,777.9    $  (216.9)
______________________________________________________________________________________________________ 

Net loss                                    (365.9)                                (365.9)
Net change in unrealized capital
 gains and losses                            388.6                   388.6
Common stock issued for benefit plans
 (1,930,085 shares)                           86.5                                                86.5
Gain on issuance of treasury stock             4.3          4.3 
Common stock dividends declared             (308.7)                                (308.7)            
                                         _____________________________________________________________

Balances at December 31, 1993              7,043.1      1,422.0      648.2        5,103.3       (130.4)
______________________________________________________________________________________________________ 

Net income                                   467.5                                  467.5
Net change in unrealized capital
 gains and losses                         (1,719.7)                (1,719.7)
Common stock issued for benefit plans
 (457,191 shares)                             26.1                                                26.1
Loss on issuance of treasury stock            (2.8)        (2.8)
Common stock dividends declared             (311.2)                                (311.2)            
                                         _____________________________________________________________

Balances at December 31, 1994              5,503.0      1,419.2    (1,071.5)      5,259.6       (104.3)
______________________________________________________________________________________________________ 

Net income                                   251.7                                  251.7
Net change in unrealized capital
 gains and losses                          1,712.6                  1,712.6
Common stock issued for benefit plans
 (2,069,335 shares)                           97.4          5.2                                   92.2
Gain on issuance of treasury stock            23.8         23.8
Common stock dividends declared             (315.7)                                (315.7)             
                                         ______________________________________________________________

Balances at December 31, 1995            $ 7,272.8    $ 1,448.2  $    641.1     $ 5,195.6    $   (12.1) 

_______________________________________________________________________________________________________ 
_______________________________________________________________________________________________________ 
<FN>

See Notes to Financial Statements.
</TABLE>

<PAGE> 73

Consolidated Statements of Cash Flows

For the years ended December 31,
<TABLE>
<CAPTION>
(Millions)                                                 1995            1994            1993       
______________________________________________________________________________________________________
<S>                                                        <C>             <C>             <C>
Cash Flows from Operating Activities:  
 Net income (loss)                                         $    251.7      $    467.5      $   (365.9)
 Adjustments to reconcile net income (loss) to
  net cash provided by (used for) operating activities:
   Cumulative effect adjustments                                    -               -            49.2
   Extraordinary loss on debenture redemption                       -               -             4.7
   Loss (Income) from Discontinued Operations                   222.2           (58.1)         (290.3)
   Increase in accrued investment income                        (21.0)          (25.9)           (4.4)
   Increase in premiums due and other
    receivables                                                (271.8)         (110.9)         (102.6)
   Decrease in reinsurance recoverables
    and receivables                                              21.1           255.2            49.8
   Increase in deferred policy acquisition costs               (267.1)         (193.5)         (159.0)
   Depreciation and amortization                                175.8           174.1           179.2
   Increase (Decrease) in federal and foreign income taxes      263.0           321.9          (453.9)
   Net (increase) decrease in other assets and
    other liabilities                                           (55.5)           10.3           278.5
   Increase in other insurance liabilities                      522.4            95.8         1,733.2
   Net sales (purchases) of debt trading securities                 -            52.3          (880.1)
   Net realized capital (gains) losses                          (47.2)           55.2            61.2
   Amortization of net investment discounts                    (123.7)         (141.3)         (175.7)
   Other, net                                                   (22.2)          (61.8)          (84.1)
 Discontinued Operations, net                                   688.7          (586.7)       (1,027.0)
                                                           ___________________________________________
    Net cash provided by (used for) operating activities      1,336.4           254.1        (1,187.2)
                                                           ___________________________________________
Cash Flows from Investing Activities:
 Proceeds from sales of:
  Debt securities available for sale                         13,747.2        14,801.6               -
  Debt securities held for investment                               -             5.6               -
  Debt securities, prior to adoption of FAS No. 115                 -               -         4,093.6
  Equity securities                                             355.9           124.2           174.4
  Mortgage loans                                                668.4           162.1           194.4
  Real estate                                                   317.1           543.4           427.1
  Short-term investments                                     48,763.1        51,936.7        55,569.0
 Investment maturities and repayments of:
  Debt securities available for sale                          2,190.9         2,499.6               -
  Debt securities held for investment                               -           573.5               -
  Debt securities, prior to adoption of FAS No. 115                 -               -         4,457.2
  Mortgage loans                                              1,404.2         1,960.5         2,319.0
 Cost of investment purchases in:
  Debt securities available for sale                        (16,842.1)      (17,639.5)              -
  Debt securities held for investment                               -          (350.3)              -
  Debt securities, prior to adoption of FAS No. 115                 -               -       (10,558.2)
  Equity securities                                            (353.2)         (353.7)         (245.4)
  Mortgage loans                                               (244.9)         (247.7)         (231.8)
  Real estate                                                   (96.9)          (59.1)          (91.4)
  Short-term investments                                    (49,024.1)      (51,811.1)      (55,160.9)
 Increase in property and equipment                            (155.3)         (135.9)         (138.6)
 Other, net                                                    (348.5)         (593.9)         (603.8)
                                                                                                      
 Discontinued Operations, net                                  (461.4)        1,342.7           592.1 
                                                           ___________________________________________
  Net cash (used for) provided by investing activities          (79.6)        2,758.7           796.7 
                                                           ___________________________________________
Cash Flows from Financing Activities:
 Deposits and interest credited for investment contracts      2,017.1         3,063.7         3,909.5
 Withdrawals of investment contracts                         (3,442.3)       (4,609.1)       (4,358.3)
 Issuance of long-term debt                                      52.4            62.5           689.9
 Repayment of long-term debt                                   (144.6)          (91.8)         (483.3)
 Issuance of preferred securities by subsidiary                     -           275.0               -
 Capital contribution to Discontinued Operations               (303.0)              -               -
 Stock issued under benefit plans                               121.2            23.3            90.8
 Net increase (decrease) in short-term debt                     375.5           (22.2)           11.7
 Corporate expenses paid by Discontinued Operations              43.4            80.8            66.2
 Dividends paid to shareholders                                (315.7)         (311.2)         (308.7)
 Discontinued Operations, net                                   250.5           (84.0)          (73.0)
                                                           ___________________________________________
Net cash used for financing activities                       (1,345.5)       (1,613.0)         (455.2)
______________________________________________________________________________________________________
Effect of exchange rate changes on cash
 and cash equivalents                                             1.4            (4.0)          (11.5)
Net decrease (increase) in cash and cash equivalents
 of Discontinued Operations                                    (477.2)         (672.2)          511.5 
______________________________________________________________________________________________________
Net (decrease) increase in cash and cash equivalents           (564.5)          723.6          (345.7)
Cash and cash equivalents, beginning of year                  2,277.2         1,553.6         1,899.3 
                                                           ___________________________________________
Cash and cash equivalents, end of year                     $  1,712.7     $   2,277.2      $  1,553.6 
______________________________________________________________________________________________________
______________________________________________________________________________________________________
<FN>
See Notes to Financial Statements.
</TABLE>

<PAGE> 74

Notes to Financial Statements

1.  Summary of Significant Accounting Policies

Aetna Life and Casualty Company and its subsidiaries provide 
insurance and financial services, primarily in the United States.  
The company's continuing business segments are Aetna Health Plans, 
Aetna Life Insurance & Annuity, International and Large Case 
Pensions.  Aetna Health Plans markets health care and related 
products and services, and other group insurance products 
primarily to employers for the benefit of employees and their 
dependents.  Aetna Life Insurance & Annuity markets a variety of 
financial services and life insurance products, including 
individual and group annuities, financial and administrative 
services and mutual funds to individuals, pension plans, small 
businesses and employer-sponsored groups. The International 
segment markets a variety of life insurance and financial services 
products, primarily in non-U.S. markets.  Group retirement and 
other savings products (other than fully guaranteed products which 
have been discontinued and are in run-off) are offered to Large 
Case Pensions' customers. The Discontinued Operations include 
commercial and personal property-casualty operations.  The 
commercial insurance operations provide most types of commercial 
property-casualty insurance (primarily workers' compensation, 
auto, liability and other specialty products), bonds and 
insurance-related services for businesses, government units and 
associations.  The personal insurance operations underwrite 
private-passenger auto and homeowner insurance, which is sold to 
individuals through independent agents, with a significant market 
in the Northeastern states.  The Discontinued Operations also 
include the international reinsurance business.

Principles of Consolidation

The consolidated financial statements include Aetna Life and 
Casualty Company and its majority-owned subsidiaries 
(collectively, the "company").  The company has agreed to sell its 
property-casualty operations to The Travelers Insurance Group Inc. 
("Travelers") and, accordingly, they are classified as 
Discontinued Operations (please refer to Note 2).  Less than 
majority-owned entities in which the company has at least a 20% 
interest are reported on the equity basis.  These consolidated 
financial statements have been prepared in accordance with 
generally accepted accounting principles.  Certain 
reclassifications have been made to 1994 and 1993 financial 
information to conform to 1995 presentation.


<PAGE> 75

Notes to Financial Statements (Continued)

1.  Summary of Significant Accounting Policies (Continued)

Accounting Changes

Accounting by Creditors for Impairment of a Loan

As of January 1, 1995, the company adopted Financial Accounting 
Standard ("FAS") No. 114, Accounting by Creditors for Impairment 
of a Loan and FAS No. 118, Accounting by Creditors for Impairment 
of a Loan - Income Recognition and Disclosures.  In accordance 
with these standards, a loan is considered impaired when it is 
probable that the company will be unable to collect amounts due 
according to the contractual terms of the loan agreement.  For 
impaired loans, a specific impairment reserve is established for 
the difference between the recorded investment in the mortgage 
loan and the fair value of the collateral.  General reserves are 
established for losses management believes are likely to arise 
from the overall portfolio but cannot be attributed to specific 
loans.  Prior to the adoption of FAS Nos. 114 and 118, the company 
included the reserve for estimated losses on potential problem 
loans (other than those allocable to experience rated products) 
which management believed were likely to become classified as 
problem or restructured in the next 12 months or so in the general 
reserve.  Adoption of these standards had no impact on 1995 net 
income.

Accounting for Certain Investments in Debt and Equity Securities

On December 31, 1993, the company adopted FAS No. 115, Accounting 
for Certain Investments in Debt and Equity Securities, which 
requires the classification of debt securities into three 
categories and equity securities into two categories. (Please 
refer to Note 5.)

Initial adoption of this standard in 1993 resulted in a cumulative 
effect charge of $.7 million ($.01 per common share), net of taxes 
of $.4 million, which is reflected in the 1993 Consolidated 
Statement of Income. These amounts exclude gains and losses 
allocable to discontinued products and experience rated 
contractholders.  Adoption of FAS No. 115 did not have a material 
effect on deferred policy acquisition costs.

Accounting for Postemployment Benefits

In 1993, the company adopted, retroactive to January 1, 1993, FAS 
No. 112, Employers' Accounting for Postemployment Benefits, which 
requires that employers accrue the cost and recognize the 
liability for providing certain benefits (primarily long-term 
disability) to former or inactive employees after employment but 
before retirement. A cumulative effect charge of $48.5 million 
($.44 per common share), net of taxes of $26.1 million, related to 
the adoption of this standard is reflected in the 1993 
Consolidated Statement of Income.  Adoption of FAS No. 112 had no 
impact on the 1993 loss from continuing operations before 
extraordinary item and cumulative effect adjustments.

<PAGE> 76

Notes to Financial Statements (Continued)

1.  Summary of Significant Accounting Policies (Continued)

Future Application of Accounting Standards

Accounting for The Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed Of

In March 1995, the Financial Accounting Standards Board ("FASB") 
issued FAS No. 121, Accounting for the Impairment of Long-Lived 
Assets and for Long-Lived Assets to be Disposed Of.  This 
statement requires write down to fair value when long-lived assets 
to be held and used are impaired.  The statement also requires 
long-lived assets to be disposed of (e.g., real estate held for 
sale) to be carried at the lower of cost or fair value less 
estimated selling costs and does not allow such assets to be 
depreciated.  The company will adopt this statement in 1996 and 
the impact on earnings is not expected to be material.

Accounting for Stock-Based Compensation

In October 1995, the FASB issued FAS No. 123, Accounting for 
Stock-Based Compensation.  This statement addressed the accounting 
for the cost of stock-based compensation, such as stock options.  
FAS No. 123 permits either expensing the cost of stock-based 
compensation over the vesting period or disclosing in the 
financial statement footnotes what this expense would have been.  
This cost would be measured at the grant date based upon estimated 
fair values, using option pricing models.  The company expects to 
adopt the disclosure alternative of this statement in 1996.

Use of Estimates

The preparation of financial statements in conformity with 
generally accepted accounting principles requires management to 
make estimates and assumptions that affect the amounts reported in 
the financial statements and accompanying notes.  Actual results 
could differ from reported results using those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, money market 
instruments and other debt issues with a maturity of 90 days or 
less when purchased.

Investments
           

Debt securities which may be sold prior to maturity are classified 
as available for sale and carried at fair value.  Available for 
sale debt securities are written down (as realized losses) for 
other than temporary declines in value.  Unrealized gains and 
losses related to available for sale investments, after deducting 
amounts allocable to experience rated contractholders, 
discontinued products and related taxes, are reflected in 
shareholders' equity.

Debt securities which the company has the positive intent and 
ability to hold to maturity are classified as held for investment 
and are carried at amortized cost, net of write-downs for other 
than temporary declines in value.  The company had no held for 
investment securities at December 31, 1995.

<PAGE> 77

Notes to Financial Statements (Continued)

1.  Summary of Significant Accounting Policies (Continued)

Investments (Continued)

In December 1995, in accordance with guidance published by the 
FASB, the company reassessed the classifications of all debt 
securities.  As a result of this review, debt securities with an 
amortized cost of $1,859.7 million (fair value of $1,896.3 
million) were reclassified from the held for investment category 
to the available for sale category.

Debt securities which are held with the objective of trading to 
generate profits on short-term differences in price ("trading 
securities") are carried at fair value.  Changes in fair value 
related to the trading portfolio are reflected in net realized 
capital gains or losses in the Consolidated Statements of Income.  
The company had no trading securities at December 31, 1995 or 
1994.

Equity securities are classified as available for sale and carried 
at fair value.  Equity securities are written down (as realized 
losses) for other than temporary declines in value.  Unrealized 
gains and losses related to such securities, after deducting 
amounts allocable to experience rated contractholders and net of 
related taxes, are reflected in shareholders' equity.

Fair values for debt and equity securities are based on quoted 
market prices or dealer quotations.  Where quoted market prices or 
dealer quotations are not available, fair values are measured 
utilizing quoted market prices for similar securities or by using 
discounted cash flow methods.  Cost for mortgage-backed securities 
is adjusted for unamortized premiums and discounts, which are 
amortized using the interest method over the estimated remaining 
term of the securities, adjusted for anticipated prepayments.

Purchases and sales of debt and equity securities are recorded on 
the trade date.  Purchases and sales of mortgage loans are 
recorded on the closing date.

Mortgage loans and policy loans are carried at unpaid principal 
balances, net of impairment reserves, and are generally secured. A 
mortgage loan is considered impaired when it is probable that the 
company will be unable to collect amounts due according to the 
contractual terms of the loan agreement.  For impaired loans, a 
specific impairment reserve is established for the difference 
between the recorded investment in the mortgage loan and the fair 
value of the collateral.  A general reserve is established for 
losses management believes are likely to arise from the overall 
portfolio but cannot be attributed to specific loans.

Investment real estate, which the company has the intent to hold 
for the production of income, is carried at depreciated cost 
including capital additions net of write-downs for other than 
temporary declines in fair value.  Properties held for sale 
(primarily acquired through foreclosure) are carried at the lower 
of depreciated cost (fair value at foreclosure plus capital 
additions less accumulated depreciation) or fair value less 
estimated selling costs.  Adjustments to the carrying value of 
properties held for sale are recorded in a valuation reserve when 
the fair value less estimated selling costs is below depreciated 
cost.

<PAGE> 78

Notes to Financial Statements (Continued)

1.  Summary of Significant Accounting Policies (Continued)

Investments (Continued)

Short-term investments, consisting primarily of money market 
instruments and other debt issues purchased with a maturity of 
91 days to one year, are considered available for sale and are 
carried at fair value, which approximates amortized cost.

Other invested assets consist primarily of partnerships, equity 
subsidiaries and agency loans.  Partnerships and equity 
subsidiaries are carried on an equity basis, and agency loans are 
carried at the unpaid principal balance.

The company utilizes foreign exchange forward contracts, futures 
contracts and swap agreements for other than trading purposes in 
order to manage investment returns and to align maturities, 
interest rates, currency rates and funds availability with its 
obligations.  (Please refer to Note 16.)

Foreign exchange forward contracts which are designated at 
inception and are effective as hedges of foreign translation 
exposures and foreign transaction exposures related to investments 
classified as available for sale are accounted for using the 
deferral method.  Under the deferral method, realized and 
unrealized gains and losses from these forward contracts are 
deferred on the Consolidated Balance Sheets, net of tax, in net 
unrealized capital gains or losses. Upon disposal of the hedged 
item, deferred gains and losses are recognized in net realized 
capital gains or losses in the Consolidated Statements of Income.  
Excess realized or unrealized gain or loss, if any, from the 
foreign exchange forward contract compared to the foreign 
investment being hedged, is reported as a net realized gain or 
loss in the Consolidated Statements of Income.

Futures contracts are carried at fair value and require daily cash 
settlement.  Changes in the fair value of futures contracts that 
qualify as hedges are deferred and recognized as an adjustment to 
the hedged asset or liability.  Deferred gains or losses on such 
futures contracts are amortized over the life of the acquired 
asset or liability as a yield adjustment or through realized 
capital gains or losses upon disposal of an asset.  Changes in the 
fair value of futures contracts that do not qualify as hedges are 
reflected in net realized capital gains or losses in the 
Consolidated Statements of Income.  Hedge designation requires 
specific asset or liability identification and at inception, a 
probability of high correlation between the hedge instrument and 
the position that underlies the hedge.  The company's policy 
requires that high correlation be maintained.  If a hedging 
instrument ceases to be highly correlated with the position 
underlying the hedge, excess gains and losses on the hedging 
instrument would be reflected in net realized capital gains or 
losses in the Consolidated Statements of Income.

Swap agreements which are designated as interest rate or foreign 
exchange rate risk management instruments at inception are 
accounted for using the accrual method.  Under the accrual method, 
the difference between amounts paid and received on such 
agreements is reported in net investment income in the 
Consolidated Statements of Income; there is no recognition in the 
Consolidated Balance Sheets for changes in the fair value of the 
agreement.


<PAGE> 79

Notes to Financial Statements (Continued)

1.  Summary of Significant Accounting Policies (Continued)

Deferred Policy Acquisition Costs

Certain costs of acquiring insurance business are deferred.  These 
costs, all of which vary with and are primarily related to the 
production of new and renewal business, consist principally of 
commissions, certain expenses of underwriting and issuing 
contracts, and certain agency expenses.  For fixed ordinary life 
and annuity contracts, such costs are amortized over expected 
premium-paying periods.  For universal life and certain annuity 
and pension contracts, such costs are amortized in proportion to 
estimated gross profits and adjusted to reflect actual gross 
profits.  These costs are amortized over 20 years for annuity and 
pension contracts, and over the contract period for universal life 
type contracts.  For all other lines of business, acquisition 
costs are amortized over the life of the insurance contract.

Deferred policy acquisition costs would be written off to the 
extent that it is determined that future policy premiums and 
investment income or gross profits would not be adequate to cover 
related losses and expenses.

Other Assets

Property and equipment are reported at depreciated cost using the 
straight-line method based upon the estimated useful lives of the 
assets.  The carrying value of property and equipment for 
continuing operations at December 31, 1995 and 1994 was 
$644.3 million and $645.4 million, respectively, and was net of 
accumulated depreciation of $823.8 million and $765.0 million, 
respectively.

Goodwill, which represents the excess of cost over the fair value 
of net assets of acquired subsidiaries and affiliates, is 
amortized on a straight-line basis over periods not exceeding 40 
years.  Total unamortized goodwill, which is included in other 
assets for continuing operations, was $147.3 million and 
$148.8 million at December 31, 1995 and 1994, respectively.

Separate Accounts
                 

Separate Accounts assets and liabilities generally represent funds 
maintained in accounts to meet specific investment objectives of 
contractholders who bear the investment risk, subject to minimum 
guaranteed rates for certain contractholders.  Investment income 
and investment gains and losses generally accrue directly to such 
contractholders.  The assets of each account are legally 
segregated and are not subject to claims that arise out of any 
other business of the company.  The assets and liabilities are 
carried at market value.  Deposits, net investment income and 
realized and unrealized capital gains and losses on Separate 
Accounts assets are not reflected in the Consolidated Statements 
of Income.  Management fees charged to contractholders are 
included in fees and other income.


<PAGE> 80

Notes to Financial Statements (Continued)

1.  Summary of Significant Accounting Policies (Continued)

Insurance Liabilities
                     

Future policy benefits include reserves for universal life, 
limited payment and traditional life insurance contracts.  
Reserves for universal life contracts are equal to cumulative 
premiums less charges plus credited interest thereon.  Reserves 
for limited payment and traditional life insurance contracts are 
computed on the basis of assumed investment yield, mortality, 
morbidity and expenses, including a margin for adverse deviation, 
which generally vary by plan, year of issue and policy duration.

Reserve interest rates range from 2.25% to 11.50%.  Investment 
yield is based on the company's experience.  Mortality, morbidity 
and withdrawal rate assumptions are based on the experience of the 
company and are periodically reviewed against both industry 
standards and experience.  Policyholders' funds left with the 
company includes reserves for pension and annuity investment 
contracts.  Reserves on such contracts are equal to cumulative 
deposits less charges plus credited interest thereon (rates range 
from 2.50% to 17.80%) net of adjustments for investment experience 
that the company is entitled to reflect in future credited 
interest.  Reserves on contracts subject to experience rating 
reflect the rights of contractholders, plan participants and the 
company.

Reserves for group health products (included in unpaid claims and 
claim adjustment expenses) reflect estimates, derived from past 
experience, of the ultimate cost of incurred claims including 
claims that have been incurred but not reported, and claims that 
have been reported, but not settled.

Revenue Recognition
                   

For universal life and certain annuity contracts, charges assessed 
against policyholders' funds for the cost of insurance, surrender 
charges, actuarial margin and other fees are recorded as revenue 
in fees and other income in the Consolidated Statements of Income.  
Other amounts received for these contracts are reflected as 
deposits and are not recorded as revenue.  Life insurance 
premiums, other than premiums for universal life and certain 
annuity contracts, are recorded as premium revenue when due.  
Related policy benefits are recorded in relation to the associated 
premiums or gross profit so that profits are recognized over the 
expected lives of the contracts.

Group health, specialty health and insurance premiums are 
generally recorded as premium revenue over the term of the 
coverage.  Some group contracts allow for premiums to be adjusted 
to reflect emerging experience.  Such premiums are recognized as 
the related experience emerges.  Fees for contracts providing 
claim processing or other administrative services are recorded 
over the period the service is provided and are reflected in fees 
and other income.

<PAGE> 81

Notes of Financial Statements (Continued)

1.  Summary of Significant Accounting Policies (Continued)

Federal and Foreign Income Taxes
                                

The company is taxed at regular corporate rates after adjusting 
income reported for financial statement purposes for certain 
items.  The company files a consolidated federal income tax 
return.  The Internal Revenue Code limits the amount of non-life 
insurance company losses that may offset life insurance company 
taxable income.  Foreign subsidiaries and U.S. subsidiaries 
operating outside of the United States are taxed under applicable 
foreign statutes.  Deferred income tax expenses/benefits result 
from changes during the year in cumulative temporary differences 
between the tax basis and book basis of assets and liabilities and 
non-life net operating losses.

Earnings Per Share

Earnings per common share are computed using net income divided by 
the weighted average number of common shares outstanding, 
including common share equivalents. There is no difference between 
primary and fully diluted earnings per share.

Reinsurance

The continuing operations of the company utilize reinsurance 
agreements to reduce exposure to large losses in all aspects of 
its insurance business.  Reinsurance permits recovery of a portion 
of losses from reinsurers, although it does not discharge the 
primary liability of the company as direct insurer of the risks 
reinsured.  The company evaluates the financial strength of 
potential reinsurers and continually monitors the financial 
condition of present reinsurers.  Only those reinsurance 
recoverables deemed probable of recovery are reflected as assets 
on the company's Consolidated Balance Sheets.

2. Sales of Subsidiaries

Property-Casualty Subsidiaries

The company entered into a definitive agreement, dated 
November 28, 1995, to sell The Aetna Casualty and Surety Company 
and The Standard Fire Insurance Company and their subsidiaries 
(collectively, the "P&C companies"), to Travelers.  The sale is 
subject to state regulatory approval and other customary 
conditions and is expected to be completed no later than midyear 
1996.  The operating results of the Property-Casualty Operations 
are presented as Discontinued Operations.  The company also 
intends to sell its subsidiary, Aetna Re-Insurance Company (U.K.) 
Ltd., and, accordingly, the operating results of this subsidiary 
are included in Discontinued Operations.  Results of the 
Discontinued Operations will be included in the company's 
consolidated results of operations until the closing.  While such 
results will not adjust the purchase price, income or loss from 
such operations will decrease or increase, respectively, the gain 
expected to be recognized on the sale.  All prior year financial 
data has been restated to reflect the presentation as Discontinued 
Operations.


<PAGE> 82

Notes of Financial Statements (Continued)

2. Sales of Subsidiaries (Continued)

Property-Casualty Subsidiaries (Continued)

Results of Discontinued Operations for the years ended December 31, 
were:

<TABLE>
<CAPTION>
(Millions)                                            1995             1994             1993  
______________________________________________________________________________________________
<S>                                                <C>              <C>              <C>
Revenue:

Premiums                                          $4,118.9          $4,390.8         $4,653.2
Net investment income                                901.7             832.1            952.4
Fees and other income                                 82.0             115.6            144.3
Net realized capital gains                           155.6                .4            178.0 
                                                  ____________________________________________

Total revenue                                      5,258.2           5,338.9          5,927.9 
______________________________________________________________________________________________

Claims and Expenses:

Claims and claim adjustment expenses               4,232.5           3,746.8          4,214.7
Operating expenses                                   787.3             914.1          1,025.4
Amortization of deferred policy
 acquisition costs                                   622.7             647.2            646.2
Severance and facilities charge                          -                 -            147.3 
                                                  ____________________________________________

Total claims and expenses                          5,642.5           5,308.1          6,033.6 
______________________________________________________________________________________________

Income (Loss) before income tax benefits and
 cumulative effect adjustments                      (384.3)             30.8           (105.7)

Income tax benefits                                 (162.1)            (27.3)          (119.7)
                                                  ____________________________________________

Income (Loss) before cumulative 
 effect adjustments                                 (222.2)             58.1             14.0

Cumulative effect adjustments, net of tax                -                 -            276.3 
                                                  ____________________________________________

Net income (loss)                                 $ (222.2)          $  58.1          $ 290.3 
                                                  ____________________________________________
                                                  ____________________________________________

Pro forma net income (loss) assuming the 
 discounting of workers' compensation life table 
 indemnity reserves is applied retroactively      $ (222.2)          $  58.1          $  40.3 
                                                  ____________________________________________
                                                  ____________________________________________

Pro forma net income (loss) assuming the 
 accounting for retrospectively rated 
 reinsurance contracts is applied retroactively   $ (222.2)          $  58.1          $ 264.0 
______________________________________________________________________________________________
                                                  ____________________________________________
</TABLE>


<PAGE> 83

Notes of Financial Statements (Continued)

2. Sales of Subsidiaries (Continued)

The Balance Sheets of the Discontinued Operations at December 31, 
were:

<TABLE>
<CAPTION>
(Millions)                                                 1995             1994 
_________________________________________________________________________________
<S>                                                    <C>           <C>

Assets:
Investments:
 Debt securities:
    Available for sale, at fair value 
      (amortized cost $11,293.8 and $9,775.9)         $11,705.6        $ 9,172.6
    Held for investment, at amortized cost
      (1994 fair value, $407.1)                               -            413.5
 Equity securities, at fair value 
  (cost $313.8 and $802.5)                                525.5          1,041.0
 Short-term investments                                   137.2            106.0
 Mortgage loans                                         1,061.7          1,453.7
 Real estate                                              264.7            262.0
 Other                                                    291.8            314.7 
                                                      ___________________________
Total investments                                      13,986.5         12,763.5 
_________________________________________________________________________________

 Cash and cash equivalents                              1,153.6            676.4
 Reinsurance recoverables and receivables               5,144.0          4,881.6
 Accrued investment income                                188.3            180.4
 Premiums due and other receivables                     1,057.4          1,129.2
 Federal and foreign income taxes:
  Current                                                  13.6             22.5
  Deferred                                                642.3            862.5
 Deferred policy acquisition costs                        305.8            316.0
 Other assets                                           1,010.9          1,017.5 
                                                      ___________________________
Total assets                                          $23,502.4        $21,849.6 
_________________________________________________________________________________
_________________________________________________________________________________

Liabilities:
 Unpaid claims and claim expenses                     $16,569.3        $16,088.9
 Unearned premiums                                      1,400.3          1,425.5
 Policyholders' funds left with the companies              39.1             46.7 
                                                      ___________________________
Total insurance liabilities                            18,008.7         17,561.1

 Short-term debt                                              -              9.1
 Long-term debt                                            35.2             35.5
 Other liabilities                                      1,525.7          1,076.6 
                                                      ___________________________
Total liabilities                                      19,569.6         18,682.3 
_________________________________________________________________________________

Total shareholder's equity (including 
 net unrealized capital gains (losses) of
 $303.1 and $(381.3))                                   3,932.8          3,167.3 
_________________________________________________________________________________

Total liabilities and shareholder's equity            $23,502.4        $21,849.6 
_________________________________________________________________________________
_________________________________________________________________________________
</TABLE>


<PAGE> 84

Notes to Financial Statements (Continued)

2. Sales of Subsidiaries (Continued)

In addition to the applicable accounting policies of the 
continuing operations of the company (please refer to Note 1), 
Discontinued Operations have the following accounting policies:

Discounting of Workers' Compensation Life Table Indemnity Reserves

In 1993, the company elected to change, retroactive to January 1, 
1993, the accounting policy for reporting reserves for current and 
expected workers' compensation life table indemnity claims to a 
discounted basis.  These reserves are discounted at 5% for 
voluntary business and 3.5% for involuntary business.  A 
cumulative effect benefit of $250.0 million ($2.25 per common 
share), net of taxes of $134.7 million, was reported in income 
from Discontinued Operations in the 1993 Consolidated Statement of 
Income.  The effect of the change for the year ended December 31, 
1993 was an increase to results from Discontinued Operations 
before cumulative effect adjustments of $78.0 million ($.70 per 
common share), net of taxes of $42.0 million.

Accounting for Retrospectively Rated Reinsurance Contracts

In 1993, the company changed its method of accounting for 
retrospectively rated reinsurance contracts to conform to the 
consensus reached by the Emerging Issues Task Force of the FASB.  
Accordingly, the company reported a cumulative effect adjustment, 
retroactive to January 1, 1993, to recognize an asset for the 
amounts due from reinsurers related to the experience through 
January 1, 1993 under retrospectively rated reinsurance contracts. 
The company reported a cumulative effect benefit related to this 
accounting change of $26.3 million ($.24 per common share), net of 
taxes of $8.6 million, in income from Discontinued Operations in 
the 1993 Consolidated Statement of Income.  The effect of the 
change for the year ended December 31, 1993 was an increase to 
results from Discontinued Operations before extraordinary item and 
cumulative effect adjustments of $3.3 million ($.03 per common 
share), net of taxes of $1.8 million.

Insurance Liabilities

Liabilities for unpaid property-casualty claims and claim 
adjustment expenses include, to the extent reasonably estimable, 
provisions for payments to be made on reported claims, and claims 
incurred but not reported and for associated claim adjustment 
expenses (see Environmental and Asbestos-Related Claims).  
Workers' compensation life table indemnity reserves are discounted 
at 5% for voluntary business and 3.5% for involuntary business.  
Workers' compensation life table indemnity reserves, net of the 
related discount, totaled $863 million and $821 million at 
December 31, 1995 and 1994, respectively, which were 26% and 24% 
of the P&C companies' total workers' compensation reserves for 
unpaid claims and claim adjustment expenses at December 31, 1995 
and 1994, respectively.  Certain other reserves with fixed or 
reasonably determinable payment patterns over periods of up to 
seven years, including reserves related to certain environmental 
and asbestos-related claim settlements, also have been discounted.  
The rates used in discounting such reserves range from 4% to 7%, 
and the amount of such discounted reserves, net of reinsurance, 
was approximately $190 million at December 31, 1995.


<PAGE> 85

Notes to Financial Statements (Continued) 

2. Sales of Subsidiaries (Continued)

Insurance Liabilities (Continued)

The P&C companies' insurance reserve liabilities are reported net 
of estimated amounts of salvage and subrogation.

Revenue Recognition

Premiums are generally recognized as revenue on a pro rata basis 
over the policy term.  Certain policies allow the company to 
charge additional premiums as a result of recognizing additional 
claim and expense costs under the policies.  Such premiums are 
recognized when the related losses are provided.

Claims and expenses, including acquisition costs such as 
commissions, certain premium taxes and certain other items, are 
charged to current operations as incurred.  Claims are reported 
net of salvage and subrogation received and anticipated.  
Premiums, claims and expenses are also reported net of deductions 
for reinsurance ceded.

Reinsurance

Prepaid reinsurance premiums were $.4 billion for the year ended 
December 31, 1995 and $.3 billion for both the years ended 
December 31, 1994 and 1993.  A summary of earned premiums for the 
years ended December 31 was as follows:

<TABLE>
<CAPTION>
(Millions)                                 1995            1994           1993   
_________________________________________________________________________________
<S>                                     <C>            <C>            <C>

Direct Amount                           $  5,007.6     $  5,094.8     $  5,477.8
Ceded to Other Companies                   1,307.0        1,206.0        1,232.6
Assumed from Other Companies                 418.3          502.0          408.0 
                                        _________________________________________
  Net Amount                            $  4,118.9     $  4,390.8     $  4,653.2 
_________________________________________________________________________________
</TABLE>

There is not a material difference in premiums on a written versus 
an earned basis.

Ceded claims and claim adjustment expenses were $.9 billion for 
the year ended December 31, 1995 and $1.2 billion for both the 
years ended December 31, 1994 and 1993.

Certain subsidiaries of the P&C companies act as servicing 
carriers for several involuntary pools.  This business is ceded 
completely to the pools, and the P&C companies have no direct 
underwriting risk associated with it.  Reinsurance recoverables 
for this business were approximately $1.7 billion and $1.8 billion 
as of December 31, 1995 and 1994, respectively.  The P&C companies 
also participate as members in a number of the involuntary pools, 
and as a result assume their share of premiums and losses 
associated with these pools.


<PAGE> 86

Notes to Financial Statements (Continued)

2. Sales of Subsidiaries (Continued)

Reinsurance (Continued)

The P&C companies also utilize a variety of reinsurance 
agreements, primarily with nonaffiliated insurers, to control 
their exposure to large property-casualty losses.  These 
agreements, most of which are renegotiated annually as to 
coverage, limits and price, are structured either on a treaty 
basis (where all risks meeting prescribed criteria are 
automatically covered) or on a facultative basis (where the 
circumstances of specific individual insurance risks are 
reflected).  The amount of risk retained by the P&C companies 
depends on the underwriter's evaluation of the specific risk, 
subject to maximum limits based on risk characteristics and the 
type of coverage.  The principal catastrophe reinsurance agreement 
currently in force covers approximately 90% of specified property 
losses between $150 million and $325 million.  The P&C companies 
also have in place an aggregate excess of loss arrangement with 
respect to all of its property-casualty lines for accident year 
1995, providing up to approximately $250 million of additional net 
protection.

Reserves

The following represents changes in aggregate reserves for the P&C 
companies:

<TABLE>
<CAPTION>
(Millions)                                              1995         1994         1993     
___________________________________________________________________________________________
<S>                                                     <C>          <C>          <C>

Net unpaid claims and claim adjustment expenses
 at beginning of year                                   $  11,144   $  11,412     $ 11,733
Incurred claims and claim adjustment expenses:
           Provision for insured events of the
            current year                                    3,099       3,488        3,536
           Increases in provision for insured
            events of prior years                           1,134 (1)     259           65  (2)
___________________________________________________________________________________________    
Total incurred claims and claim adjustment expenses         4,233       3,747        3,601 
___________________________________________________________________________________________
Payments:  Claims and claim adjustment expenses
            attributable to insured events of
            the current year                                1,092       1,240        1,039
           Claims and claim adjustment expenses
            attributable to insured events of
            prior years                                     2,540       2,775        2,883 
___________________________________________________________________________________________
Total payments                                              3,632       4,015        3,922 
___________________________________________________________________________________________
Net unpaid claims and claim adjustment expenses
 at end of the year                                        11,745      11,144       11,412
  Plus:  Reinsurance recoverables                           4,412       4,593        4,394
         Deductible amounts recoverable
          from policyholders                                  412         352            - 
___________________________________________________________________________________________
Gross unpaid claims and claim adjustment expenses
 at end of the year                                     $  16,569   $  16,089     $ 15,806 
___________________________________________________________________________________________
                                                        ___________________________________
<FN>

(1) Includes increases in provision for insured events of prior years of $399 million
    related to asbestos-related claims and $778 million related to environmental-
    related claims.

(2) Includes increases in provision for insured events of prior years of $679 million,
    offset by the cumulative effect adjustment related to the change in accounting to
    report workers' compensation life table indemnity claims on a discounted basis of
    $(514) million and the current year effect of this change in accounting of
    $(100) million related to the provision for insured events of prior years.
</TABLE>


<PAGE> 87

Notes to Combined Financial Statements (Continued)

2. Sales of Subsidiaries (Continued)

Environmental and Asbestos-Related Claims

The P&C companies added $778 million ($505.7 million, after tax) 
to environmental-related claims reserves in 1995.  In the opinion 
of management, the P&C companies' reserves for environmental-
related claims at December 31, 1995 represent the company's best 
estimate of the P&C companies' ultimate environmental-related 
liability, based on currently known facts, current law (including 
Superfund), current technology, and assumptions considered 
reasonable where facts are not known.  Due to the significant 
uncertainties and related management judgment involved in 
estimating the P&C companies' environmental liability, no 
assurances can be given that the environmental reserve represents 
the amount that will ultimately be paid by the P&C companies for 
all environmental-related losses.  The amount ultimately paid 
could differ materially from the P&C companies' currently recorded 
reserve as legal and factual issues are clarified, but any 
difference cannot be reasonably estimated at this time.

As a result of this addition to the environmental-related claims 
reserves, the company contributed $303 million of additional 
capital to the P&C companies in the fourth quarter of 1995 in 
order to restore capital levels (including risk-based capital), to 
appropriate levels for regulatory and other purposes.  The funding 
for such capital contribution was obtained through short-term 
parent company borrowings.

In conjunction with the reserve addition for environmental-related 
claims, the P&C companies purchased reinsurance which provided 
aggregate protection of $335 million for the adverse loss 
development beyond reserves held (net of existing reinsurance).  
Under this arrangement, approximately $165 million of the existing 
reserves for such losses were ceded at the time the contract was 
entered into. As a result of the asbestos-related reserve addition 
(see below) and other reserve developments, substantially all of 
the available statutory surplus protection was utilized during 
1995.  There was an immaterial benefit to results of Discontinued 
Operations under this arrangement.


<PAGE> 88

Notes to Financial Statements (Continued)

2. Sales of Subsidiaries (Continued)

Environmental and Asbestos-Related Claims (Continued)

In 1995, the P&C companies settled a case involving a policyholder 
(a major producer of asbestos and asbestos products) that had 
exhausted applicable policy limits on asbestos products claims and 
asserted coverage under policy provisions for other types of 
liability.  The P&C companies obtained a release from the insured 
for all current and future asbestos bodily injury claims and 
certain asbestos property damage claims (along with all 
environmental claims) under existing policies in exchange for 
fixed, scheduled cash payments, which were recorded on a 
discounted basis.  In connection with this settlement, 
$120 million of property-casualty reserves not previously 
classified as covering asbestos-related claims were transferred to 
asbestos reserves.  No amounts were transferred from environmental 
reserves, and the environmental-related portion of the settlement 
was covered by existing environmental reserves.  As a result, this 
settlement did not affect 1995 results of operations.  As part of 
the settlement, the companies also agreed, among other things, to 
make insurance coverage available to the insured in the year 2000 
(on a one-time basis), for a percentage of all asbestos defense 
and indemnity claim payments made by the insured during the years 
2000 through 2007.  The P&C companies' payment obligations would 
be subject to annual dollar caps.  Given the uncertainty as to 
whether the insured will elect to purchase this additional 
insurance, no related premiums or losses have been recorded by the 
P&C companies at this time.

Reserving for asbestos-related claims is subject to significant 
uncertainties and management is currently unable to make a 
reasonable estimate as to the ultimate amount of losses or a 
reasonable range of losses for all asbestos-related claims and 
related litigation expenses.  Management has continued to evaluate 
reserves for asbestos liabilities as the company continued to 
gather and analyze new information and reassess its reserving 
techniques for these claims in order to determine whether it can 
better estimate its liability.  In connection with such 
evaluation, the company added $335 million ($218 million, after 
tax) to asbestos-related claims reserves in the fourth quarter of 
1995.  While the company expects to recover some of its asbestos 
losses from its reinsurers, due to the uncertainty in estimating 
amounts to be recovered, no reinsurance benefits were recorded in 
establishing this addition to reserves.  Further adjustments may 
be made to such reserves as loss patterns develop and other 
information is obtained, and the amount ultimately paid for such 
claims could differ materially from reserves, although any 
difference cannot be reasonably estimated at this time.


<PAGE> 89

Notes to Financial Statements (Continued)

2. Sales of Subsidiaries (Continued)

Environmental and Asbestos-Related Claims (Continued)

Environmental and asbestos-related loss and loss adjustment 
expense reserves, as reflected on the Balance Sheets at 
December 31, were as follows (before reinsurance and net of 
discounts on certain environmental and asbestos settlements):

<TABLE>
<CAPTION>
(Millions)                              1995            1994  
______________________________________________________________
<S>                                    <C>             <C>
Environmental Liability                $ 1,005.9      $ 436.1
Asbestos Bodily Injury*                    754.3        295.9
Asbestos Property Damage*                   22.3         29.9
                                        _____________________
  Total Environmental and
   Asbestos-Related Reserves           $ 1,782.5      $ 761.9
_____________________________________________________________
                                       ______________________
</TABLE>
[FN]

*Includes $107.4 million and $12.6 million of reserves transferred to asbestos 
 bodily injury and asbestos property damage reserves, respectively, in
 1995.

Workers' Compensation Claims

Estimating workers' compensation reserves is particularly 
difficult (and, therefore, more subject to change than many other 
types of property-casualty claims), largely because of the length 
of the "tail" associated with workers' compensation claims.  
Workers' compensation claim costs are dependent on a number of 
complex factors including social and economic trends and changes 
in doctrines of legal liability and damage awards.  Adjustments 
may be made to such reserves as loss patterns develop and other 
information is obtained.

Other

Policyholders of the P&C companies also seek insurance coverage 
from the P&C companies for other long-term exposure claims against 
them, including claims relating to silicone-based personal 
products, lead paint and other allegedly toxic or harmful 
substances.  Evaluating and reserving for these types of exposures 
is complex and subject to many uncertainties including those 
stemming from coverage issues, long latency periods and changing 
or expanding laws and legal theories of liability.  Adjustments 
will be made to such reserves as loss patterns develop and new 
information becomes available, and such adjustments may be 
material to Discontinued Operations.

Sale of American Re-Insurance Company

On September 30, 1992, Aetna Casualty and Surety Company ("AC&S") 
completed the sale of American Re-Insurance Company ("Am Re"), 
formerly a wholly owned subsidiary. As part of the sale, AC&S 
received 70,000 shares of American Re Corporation's (the new 
holding company) Preferred Stock, which were redeemed in 1993 
resulting in an after-tax gain of $27.0 million.


<PAGE> 90

Notes to Financial Statements (Continued)

2. Sales of Subsidiaries (Continued)

Sale of American Re-Insurance Company (Continued)

In connection with the 1992 sale of Am Re, Am Re and AC&S entered 
into a reinsurance agreement which provides that to the extent Am 
Re incurred losses in 1991 and prior that were still outstanding 
at January 1, 1992 in excess of $2.7 billion, AC&S has an 80% 
participation in payments on those losses up to a maximum payment 
by AC&S of $500 million.  In 1995, Am Re increased reserves for 
asbestos, environmental and other latent liabilities.  As a result 
of this increase, losses of approximately $228 million 
($120 million after discount), which were largely workers' 
compensation life table indemnity claims, were ceded to AC&S.  
There was no material impact on 1995 earnings as AC&S had 
previously established reserves.  It is reasonably possible that 
additional undiscounted losses of up to approximately $270 million 
pretax could be ceded to the company in the future.

Financial Guarantees

The company no longer writes municipal bond insurance, and such 
business previously written by the company was reinsured with 
another company.  It is not practicable to estimate the fair value 
of the business that has been ceded.

AC&S was a writer of financial guarantees on obligations secured 
by real estate, corporate debt obligations, and of municipal and 
nonmunicipal tax-exempt entities through December 31, 1987, and 
ceased writing such guarantees as of January 1, 1988.  The 
aggregate net par value of financial guarantees outstanding at 
December 31, 1995 and 1994 was $656.4 million and $728.3 million, 
respectively.  Future runoff of financial guarantees as of 
December 31, 1995, after adjusting for extensions granted on 
certain guarantees, is estimated to be $31.9 million for 1996, 
$135.4 million for 1997, $276.7 million for 1998, $3.8 million for 
1999, $7.4 million for 2000 and $201.2 million thereafter.  It is 
not practicable to estimate a fair value for AC&S' financial 
guarantees because AC&S no longer writes such guarantees, there is 
no quoted market price for such contracts, and it is not 
practicable to reliably estimate the timing and amount of all 
future cash flows due to the unique nature of each of these 
contracts.

Total reserves for the financial guarantee business, which include 
reserves for defaults, probable losses not yet identified and 
unearned premiums, were $40.5 million and $47.7 million at 
December 31, 1995 and 1994, respectively. Premium income received 
from such guarantees is recognized pro rata over the contract 
coverage period.


<PAGE> 91

Notes to Financial Statements (Continued)

2. Sales of Subsidiaries (Continued)

Structured Settlements

The P&C companies had contingent liabilities in the amount of 
$1,189.3 million and $1,097.2 million for structured settlements 
at December 31, 1995 and 1994, respectively.  Included in such 
liabilities is $352.4 million and $280.0 million of structured 
settlements purchased from affiliates, consisting of 
$177.2 million and $153.4 million from Aetna Life Insurance 
Company at December 31, 1995 and 1994, respectively, and 
$175.2 million and $126.6 million from Aetna Life Insurance and 
Annuity Company at December 31, 1995 and 1994, respectively.  
Structured settlements, net of the affiliate amounts, are 
reflected in reinsurance recoverables on the Discontinued 
Operations' Balance Sheets.

Litigation

The P&C companies are continuously involved in numerous lawsuits 
arising, for the most part, in the ordinary course of their 
business operations either as liability insurers defending third-
party claims brought against their insureds or as insurers 
defending coverage claims brought against them, including lawsuits 
related to issues of policy coverage and judicial interpretation.  
One such area of coverage litigation involves legal liability for 
environmental and asbestos-related claims.  These lawsuits and 
other factors make reserving for these claims subject to 
significant uncertainties.

While the ultimate outcome of such litigation cannot be determined 
at this time, such litigation, net of reserves established 
therefor and giving effect to reinsurance probable of recovery, is 
not expected to result in judgments for amounts material to the 
financial condition of the P&C companies, although it may 
adversely affect results of operations in future periods.

Other Subsidiaries

On June 30, 1993, the company completed the sale of its U.K. life 
and investment management operations.  The company realized a 
continuing operations after-tax capital loss of $12.0 million on 
the sale as well as $37.4 million of tax benefits from cumulative 
operating losses of the subsidiary not previously tax benefited.


<PAGE> 92

Notes to Financial Statements (Continued)

3.  Discontinued Products

Results of discontinued fully guaranteed large case pension 
products (guaranteed investment contracts ("GICs") and single-
premium annuities ("SPAs")) for the years ended December 31, 1995 
and 1994 were charged to the reserve for anticipated future losses 
and did not affect the company's results of operations.  Assets 
supporting the discontinued products are distinguished from other 
continuing operation assets.  Future losses (including capital 
losses) for each product will be charged to the respective reserve 
at the time such losses are realized.  Management believes the 
reserve for anticipated losses at December 31, 1995 is adequate to 
provide for future losses associated with these products.  To the 
extent that actual future losses differ from anticipated future 
losses or future projected cash flows are revised, the company's 
results of operations would be affected.

Results of discontinued products were as follows (pretax):

<TABLE>
<CAPTION>
                                     Guaranteed     Single-                   Charged to
                                     Investment     Premium                   Reserve for
(Millions)                           Contracts      Annuities      Total      Future Losses       Net(1)    
____________________________________________________________________________________________________________
1995
<S>                                  <C>            <C>            <C>        <C>                 <C>

Net investment income                $   515.4      $   447.5      $   962.9  $       -           $   962.9
Net realized capital gains (losses)      (56.4)          49.3           (7.1)       7.1                   -
Interest earned on receivable from
 continuing business                      20.3           30.5           50.8          -                50.8
Other income                               8.8           11.9           20.7          -                20.7 
                                     _______________________________________________________________________
  Total revenue                          488.1          539.2        1,027.3        7.1             1,034.4 
                                     _______________________________________________________________________

Current and future benefits (2)          609.4          443.7        1,053.1      (31.1)            1,022.0
Operating expenses                         2.9            9.5           12.4          -                12.4 
                                     _______________________________________________________________________
  Total benefits and expenses            612.3          453.2        1,065.5      (31.1)            1,034.4 
                                     _______________________________________________________________________

Results of discontinued products     $  (124.2)     $    86.0      $   (38.2) $    38.2           $       - 
____________________________________________________________________________________________________________
____________________________________________________________________________________________________________
1994

Premiums                             $       -      $    57.3      $    57.3  $       -           $    57.3
Net investment income                    633.1          433.0        1,066.1          -             1,066.1
Net realized capital losses             (150.2)         (58.8)        (209.0)     209.0                   -
Interest earned on receivable from
 continuing business                      19.4           28.1           47.5          -                47.5
Other income                              14.9           16.2           31.1          -                31.1 
                                     _______________________________________________________________________
  Total revenue                          517.2          475.8          993.0      209.0             1,202.0 
                                     _______________________________________________________________________

Current and future benefits              765.5          491.4        1,256.9      (64.0)            1,192.9
Operating expenses                         6.1            3.0            9.1          -                 9.1 
                                     _______________________________________________________________________
  Total benefits and expenses            771.6          494.4        1,266.0      (64.0)            1,202.0 
                                     _______________________________________________________________________
Results of discontinued products     $  (254.4)     $   (18.6)     $  (273.0) $   273.0           $       - 
____________________________________________________________________________________________________________
____________________________________________________________________________________________________________
<FN>

(1) Amounts are reflected in the 1995 and 1994 Consolidated Statements of Income, except for interest of 
    $50.8 million and $47.5 million, respectively, earned on the receivable from continuing business 
    which is eliminated in consolidation.
(2) Current and future benefits include losses of $50 million (pretax) due to early retirement of GICs.
</TABLE>

Deposits of $31.5 million and $212.3 million were received during 
1995 and 1994, respectively, under preexisting GICs.


<PAGE> 93

Notes to Financial Statements (Continued)

3.  Discontinued Products (Continued)

Assets and liabilities of discontinued products were as follows (1):

<TABLE>
<CAPTION>
                                     December 31, 1995                        December 31, 1994             
                             _______________________________________________________________________________
                             Guaranteed    Single-                   Guaranteed    Single-
                             Investment    Premium                   Investment    Premium
(Millions)                   Contracts     Annuities     Total       Contracts     Annuities     Total      
____________________________________________________________________________________________________________
<S>                          <C>           <C>           <C>         <C>           <C>           <C>

Debt securities
 available for sale          $  2,120.3    $  3,644.9    $  5,765.2   $  2,978.5   $  3,176.5    $  6,155.0
Mortgage loans                  1,883.0       1,505.6       3,388.6      2,749.6      1,545.3       4,294.9
Real estate                       457.3         177.7         635.0        555.0        175.0         730.0
Short-term and other
 investments                      425.3         110.5         535.8        587.4        138.0         725.4
                             ______________________________________________________________________________
  Total investments             4,885.9       5,438.7      10,324.6      6,870.5      5,034.8      11,905.3
Current and deferred
 income taxes                     135.7         123.1         258.8        218.8        115.4         334.2
Receivable from continuing
 products (1)                     429.7         493.6         923.3        409.4        463.1         872.5
Other                                 -             -             -         90.7         92.9         183.6
                             ______________________________________________________________________________
  Total Assets               $  5,451.3    $  6,055.4    $ 11,506.7   $  7,589.4   $  5,706.2    $ 13,295.6
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________

Future policy benefits       $        -    $  4,924.5    $  4,924.5   $        -   $  5,032.6    $  5,032.6
Policyholders' funds left
 with the company               5,058.9             -       5,058.9      7,224.4            -       7,224.4
Reserve for future losses
 on discontinued products         221.4         737.4         958.8        345.6        651.4         997.0
                                                                                                           
Other                             171.0         393.5         564.5         19.4         22.2          41.6
___________________________________________________________________________________________________________
                                                                                                           
                                                                                                           
  Total Liabilities          $  5,451.3    $  6,055.4    $ 11,506.7   $  7,589.4   $  5,706.2    $ 13,295.6
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
<FN>

(1) The receivable from continuing products is eliminated in consolidation at December 31, 
    1995 and 1994.
</TABLE>

Net unrealized capital gains in 1995 and losses in 1994 on 
available for sale debt securities are included above in other 
liabilities and other assets, respectively, and are not reflected 
in consolidated shareholders' equity.  The reserve for anticipated 
future losses on GICs is included in policyholders' funds left 
with the company, and the reserve for anticipated future losses on 
SPAs is included in future policy benefits on the Consolidated 
Balance Sheets.

The reserve for anticipated future losses on discontinued products 
represents the present value (at the risk free rate at the time of 
discontinuance, consistent with the duration of the liabilities) 
of the difference between (a) the expected cash flows from the 
assets supporting discontinued products, and (b) the cash flows 
expected to be required to meet the obligations of the outstanding 
contracts.  Calculation of the reserve for anticipated future 
losses on discontinued products required projection of both the 
amount and the timing of cash flows over approximately the next 30 
years, including consideration of, among other things, future 
investment results, participant withdrawal and mortality rates, 
and cost of asset management and customer service.  Projections of 
future investment results took into account both industry and 
company data and were based on performance of mortgage loan and 
real estate assets, projections regarding certain levels of future 
defaults and prepayments, and assumptions regarding future real 
estate market conditions, which assumptions management believes 
are reasonable.  Management continues to believe that the reserve 
for anticipated future losses will be adequate to provide for the 
future losses associated with the runoff of the liabilities.


<PAGE> 94

Notes to Financial Statements (Continued)

3.  Discontinued Products (Continued)

At December 31, 1995 and 1994, estimated future after-tax realized 
capital losses of $92.8 million and $127.7 million ($142.8 million 
and $196.4 million, pretax), respectively, attributable to 
mortgage loans and real estate supporting GICs, and $38.0 million 
and $47.7 million ($58.5 million and $73.4 million, pretax), 
respectively, attributable to mortgage loans and real estate 
supporting SPAs were expected to be charged to the reserve for 
future losses.  Included in the $(56.4) million and $49.3 million 
of net realized capital (losses) gains (pretax) on GICs and SPAs, 
respectively, for the year ended December 31, 1995, are (losses) 
gains from the sale of bonds of $(2.8) million and $64.2 million, 
respectively.  Included in the $150.2 million and $58.8 million of 
net realized capital losses (pretax) on GICs and SPAs, 
respectively, for the year ended December 31, 1994, are losses 
from the sale of bonds of $54.6 million and $24.1 million, 
respectively.

The activity in the reserve for anticipated future losses on 
discontinued products for the years ended December 31, 1995 and 
1994 was as follows:

<TABLE>
<CAPTION>
                                        Guaranteed    Single-
                                        Investment    Premium
(Millions)                              Contracts     Annuities      Total    
______________________________________________________________________________
<S>                                     <C>           <C>            <C>

Reserve at December 31, 1993            $  600.0      $  670.0       $1,270.0
Results of discontinued products          (254.4)        (18.6)        (273.0)
                                        ______________________________________
Reserve at December 31, 1994               345.6         651.4          997.0
Results of discontinued products          (124.2)         86.0          (38.2)
                                        ______________________________________
Reserve at December 31, 1995            $  221.4      $  737.4       $  958.8 
______________________________________________________________________________
______________________________________________________________________________
</TABLE>

At the time of discontinuance, a receivable from continuing 
products was established for each discontinued product equivalent 
to the net present value of the anticipated cash flow shortfalls.  
The receivables, on which interest is accrued at the discount 
rates used to calculate the loss on discontinuance, will be 
funded, net of taxes on the accrued interest, from invested assets 
supporting Large Case Pensions.  The offsetting payable, on which 
interest is similarly accrued, was established in continuing 
products.  The interest on such payable generally offsets the 
investment income on the assets available to fund the shortfall.  
At December 31, 1995, for GICs and SPAs, the receivables from 
continuing products, net of the related deferred taxes payable of 
$13.9 million and $20.5 million, respectively, on the accrued 
interest income were $415.8 million and $473.1 million, 
respectively.  At December 31, 1994, for GICs and SPAs, the 
receivables from continuing products, net of the related deferred 
taxes payable of $6.8 million and $9.8 million, respectively, on 
the accrued interest income were $402.6 million and 
$453.3 million, respectively.  As of December 31, 1995, no funding 
had taken place.  These amounts are eliminated in consolidation 
and are therefore not reflected on the Consolidated Balance 
Sheets.


<PAGE> 95

Notes to Financial Statements (Continued)

4.  Severance and Facilities Charge

The company recorded a $200 million after-tax ($308 million 
pretax) severance and facilities charge in the fourth quarter of 
1993 (of which $96 million after-tax and $147 million pretax 
related to Discontinued Operations).  The planned actions included 
the elimination of approximately 4,000 positions (2,000 of which 
related to Discontinued Operations).  The severance and facilities 
charge included costs related to vacating excess leased office 
space and costs related to vacating and selling an owned property 
in Hartford, Connecticut.  The 1993 severance and facilities 
charge included the following (pretax):

<TABLE>
<CAPTION>
                                                   Facility and    Vacated
                                        Severance  Asset Write-    Leased
(Millions)                              Related    Off Related     Property     Other          Total  
                                        _________  ____________    ________     _______        _______
<S>                                     <C>        <C>             <C>          <C>            <C>

Aetna Health Plans..................... $  44.4    $  20.4         $  11.8      $   3.2        $  79.8
Aetna Life Insurance & Annuity.........    10.9        5.1             1.4         13.4 (1)       30.8
International..........................     4.6        2.9             2.0          1.5           11.0
Large Case Pensions....................    11.5        8.4             1.0          1.0           21.9
Corporate:  Other......................    12.2        5.0               -            -           17.2
                                        _______    _______         _______      _______        _______
Total Continuing Operations (2)........ $  83.6    $  41.8 (3)     $  16.2      $  19.1        $ 160.7
                                        _______    _______         _______      _______        _______
                                        _______    _______         _______      _______        _______
Discontinued Operations................ $  96.8    $  24.2         $  20.7      $   5.6        $ 147.3
                                        _______    _______         _______      _______        _______
                                        _______    _______         _______      _______        _______
<FN>

(1) Includes a charge of $13.0 million related to the cessation of a business providing
    administrative services to defined contribution pension plans.  The charge includes
    broker buyout, direct losses on runoff of the existing contracts and other related costs.

(2) Facility and asset write-off related charges are noncash costs.  All other items shown above
    required, or will require, cash outlays.

(3) Facility and asset write-off related charges included the write-down of a company property that
    was vacated and sold. Facility and asset write-off related charges also included costs to retire 
    computer equipment used by employees whose positions were eliminated and other related costs.
</TABLE>

During 1995 and 1994, the company charged costs of $83.9 million 
and $224.1 million (pretax) (of which $12.6 million and $134.7 
million related to Discontinued Operations), respectively, to the 
1993 severance and facilities reserve related to the cost 
reduction actions.

The remaining lease payments (net of expected subrentals) on 
vacated leased office space are payable over approximately the 
next five years.


<PAGE> 96

Notes to Financial Statements (Continued)

5.  Investments

<TABLE>
<CAPTION>

Debt securities at December 31, 1995 were as follows:

                                                        Gross          Gross
                                         Amortized      Unrealized     Unrealized    Fair
(Millions)                               Cost           Gains          Losses        Value
________________________________________________________________________________________________
<S>                                      <C>            <C>            <C>           <C>

 Available for Sale:                                                                            

  U.S. Treasury securities and
   obligations of U.S. government
   agencies and corporations             $  3,452.2     $    183.5     $       .7    $  3,635.0
  Obligations of states and
   political subdivisions                     292.5           41.3             .6         333.2
  Utilities                                 2,599.4          213.8            3.4       2,809.8
  Financial                                 5,158.3          245.6           13.5       5,390.4
  Transportation/Capital Goods              1,967.5          205.3            2.4       2,170.4
  Other corporate securities                4,058.1          299.8           13.0       4,344.9
  Mortgage-backed securities                5,393.4          381.4           11.1       5,763.7
  Other loan-backed securities              1,720.4           46.0            1.2       1,765.2
  Foreign governments                       3,102.9          178.4           17.7       3,263.6
  Other                                     2,217.8          175.3            9.0       2,384.1
                                         ______________________________________________________
    Total Available for Sale -
    continuing operations                $ 29,962.5     $  1,970.4     $     72.6    $ 31,860.3
_______________________________________________________________________________________________
                                         ______________________________________________________
Available for sale securities of
   discontinued products
   (included above)                      $  5,344.1     $    435.5     $     14.4    $  5,765.2
_______________________________________________________________________________________________
                                         ______________________________________________________
Available for sale securities -
   Discontinued Operations               $ 11,293.8     $    456.4     $     44.6    $ 11,705.6
_______________________________________________________________________________________________
                                         ______________________________________________________
</TABLE>


<PAGE> 97

Notes to Financial Statements (Continued)

5.  Investments (Continued)

<TABLE>
<CAPTION>

Debt securities at December 31, 1994 were as follows:

                                                         Gross         Gross
                                         Amortized       Unrealized    Unrealized    Fair
(Millions)                               Cost            Gains         Losses        Value      
________________________________________________________________________________________________
Available for Sale:

<S>                                      <C>             <C>           <C>           <C>
  U.S. Treasury securities and
   obligations of U.S. government
   agencies and corporations             $  4,668.9     $    12.4      $   375.0     $  4,306.3
  Obligations of states and
   political subdivisions                     331.6           7.3            7.0          331.9
  Utilities                                 2,084.4          50.8          113.5        2,021.7
  Financial                                 4,640.2          28.6          238.7        4,430.1
  Transportation/Capital Goods              2,088.6          58.2           88.5        2,058.3
  Other corporate securities                2,195.6          27.9          113.4        2,110.1
  Mortgage-backed securities                5,643.1         119.6          323.0        5,439.7
  Other loan-backed securities              1,359.0            .2           41.8        1,317.4
  Foreign governments                       1,997.4          10.4          192.0        1,815.8
  Other                                     2,199.5          26.9          119.6        2,106.8 
                                         _______________________________________________________
    Total Available for Sale -
    continuing operations                $ 27,208.3     $   342.3      $ 1,612.5     $ 25,938.1 
________________________________________________________________________________________________
                                         _______________________________________________________

Available for sale securities -
   discontinued products 
   (included above)                      $  6,349.8     $   137.9      $   332.7     $  6,155.0 
________________________________________________________________________________________________
                                         _______________________________________________________

Available for sale securities -
   Discontinued Operations               $  9,775.9     $    16.6      $   619.9     $  9,172.6 
________________________________________________________________________________________________
                                         _______________________________________________________

Held for Investment:

  U.S. Treasury securities and
   obligations of U.S. government
   agencies and corporations             $      6.5            .5     $        -     $      7.0
  Obligations of states and
   political subdivisions                      29.2            .4            1.6           28.0
  Utilities                                    98.3             -            1.0           97.3
  Financial                                   181.3           1.9            1.3          181.9
  Transportation/Capital Goods                207.7           3.3            1.5          209.5
  Other corporate securities                   49.8             -              -           49.8
  Mortgage-backed securities                   10.5             -             .6            9.9
  Other loan-backed securities                 15.0             -             .6           14.4
  Foreign governments                         600.1            .3             .1          600.3
  Other                                       388.9           4.3            7.2          386.0 
                                         _______________________________________________________
    Total Held for Investment -
    continuing operations                $  1,587.3     $    10.7      $    13.9     $  1,584.1 
________________________________________________________________________________________________
                                         _______________________________________________________

Held for Investment - Discontinued
 Operations                              $    413.5     $     3.9      $    10.3     $    407.1 
________________________________________________________________________________________________
                                         _______________________________________________________

</TABLE>

At December 31, 1995 and 1994, net unrealized appreciation 
(depreciation) from continuing operations of $1,897.8 million and 
$(1,270.2) million, respectively, on available for sale debt 
securities included $960.0 million and $(607.3) million, 
respectively, related to experience rated contractholders and 
$421.1 million and $(194.8) million, respectively, related to 
discontinued products, which were not reflected in shareholders' 
equity.


<PAGE> 98

Notes to Financial Statements (Continued)

5.  Investments (Continued)

The carrying and fair value of debt securities are shown below by 
contractual maturity.  Actual maturities may differ from 
contractual maturities because securities may be restructured, 
called or prepaid.

<TABLE>
<CAPTION>

1995                                        Amortized      Fair
(Millions)                                  Cost           Value    
____________________________________________________________________
<S>                                         <C>            <C>

Available for Sale - Continuing Operations                          

Due to mature:
  One year or less                          $  1,515.7     $  1,520.7
  After one year through five years            7,218.3        7,388.1
  After five years through ten years           5,990.1        6,401.5
  After ten years                              8,124.6        9,021.1
  Mortgage-backed securities                   5,393.4        5,763.7
  Other loan-backed securities                 1,720.4        1,765.2
_____________________________________________________________________
    Total                                   $ 29,962.5     $ 31,860.3
_____________________________________________________________________
                                            _________________________

Available for Sale - Discontinued 
 Operations                          

Due to mature:
  One year or less                          $    808.9     $    851.7
  After one year through five years            3,873.0        3,922.3
  After five years through ten years           2,530.9        2,645.2
  After ten years                              1,718.3        1,870.5
  Mortgage-backed securities                   1,655.5        1,697.5
  Other loan-backed securities                   707.2          718.4
_____________________________________________________________________
    Total                                   $ 11,293.8     $ 11,705.6
_____________________________________________________________________
                                            _________________________
</TABLE>

The company engages in securities lending whereby certain 
securities from its portfolio are loaned to other institutions for 
short periods of time.  Cash collateral, which is in excess of the 
market value of the loaned securities, is deposited by the 
borrower with a lending agent, and retained and invested by the 
lending agent to generate additional income for the company.  The 
market value of the loaned securities is monitored on a daily 
basis with additional collateral obtained or refunded as the 
market value fluctuates.  At December 31, 1995, the company had 
loaned securities (which are reflected as invested assets on the 
Consolidated Balance Sheets) with a market value of approximately 
$1.3 billion (an additional $.9 billion is included in 
Discontinued Operations assets).

Investments in equity securities were as follows:

<TABLE>
<CAPTION>
                                           Gross         Gross
                                           Unrealized    Unrealized    Fair
(Millions)                   Cost          Gains         Losses        Value     
_________________________________________________________________________________
<S>                          <C>           <C>           <C>           <C>
1995                                                                             
_________________________________________________________________________________
Equity securities -
 continuing operations       $   597.8    $    85.1     $    23.2      $   659.7 
_________________________________________________________________________________
                             ____________________________________________________

Equity securities - 
 Discontinued Operations     $   313.8    $   288.3     $    76.6      $   525.5 
_________________________________________________________________________________
                             ____________________________________________________

1994                                                                             
_________________________________________________________________________________
Equity securities -
 continuing operations       $   594.0    $    63.6     $    43.0      $   614.6 
_________________________________________________________________________________
                             ____________________________________________________

Equity securities -
 Discontinued Operations     $   802.5    $   336.1     $    97.6      $ 1,041.0 
_________________________________________________________________________________
                             ____________________________________________________
</TABLE>

<PAGE> 99

Notes to Financial Statements (Continued)

5.  Investments (Continued)

Real Estate holdings at December 31 were as follows:

<TABLE>
<CAPTION>

(Millions)                                    1995         1994      
_____________________________________________________________________
<S>                                           <C>          <C>

Properties held for sale                      $  1,230.2  $  1,198.5
Investment real estate                             177.7       196.6 
                                              _______________________
                                                 1,407.9     1,395.1
Valuation reserve                                  130.6       111.4 
                                              _______________________
  Net carrying value of real estate
   of continuing operations                   $  1,277.3  $  1,283.7 
_____________________________________________________________________
                                              _______________________
  Net carrying value of real estate of
   discontinued products (included above)     $    635.0  $    730.0 
_____________________________________________________________________
                                              _______________________

Net carrying value of real estate of
   Discontinued Operations                    $    264.7  $    262.0 
_____________________________________________________________________
                                              _______________________
</TABLE>

The accumulated depreciation for real estate for continuing 
operations was $116.6 million and $102.4 million at December 31, 
1995 and 1994, respectively.  Discontinued Operations' accumulated 
depreciation for real estate was $29.0 million and $19.1 million 
at December 31, 1995 and 1994, respectively.

Total real estate write-downs included in the net carrying value 
of the company's continuing operations real estate holdings on the 
Consolidated Balance Sheets at December 31, 1995 and 1994 were 
$555.4 million and $533.2 million, respectively, (including 
$299.2 million and $315.8 million, respectively, attributable to 
assets of discontinued products).  Real estate write-downs 
included in the real estate holdings of Discontinued Operations 
were $116.4 million and $83.3 million at December 31, 1995 and 
1994, respectively.

At December 31, 1995, the total recorded investment in mortgage 
loans that are considered to be impaired (which include problem 
loans, restructured loans and potential problem loans) under FAS 
No. 114 and related specific reserves are presented in the table 
below.  Included in the total recorded investment are impaired 
loans of $478 million ($61 million of which are related to 
Discontinued Operations) for which no specific reserves are 
considered necessary.

<TABLE>
<CAPTION>
                                              Total
                                              Recorded          Specific
(Millions)                                    Investment        Reserves 
_________________________________________________________________________
<S>                                           <C>               <C>

Supporting discontinued products              $   755.4         $   200.9
Supporting experience rated products              439.2             115.1
Supporting remaining products                     329.8              45.2
                                              ___________________________
   Total Impaired Loans - continuing
    operations                                $ 1,524.4         $   361.2
_________________________________________________________________________
                                              ___________________________

Supporting Discontinued Operations            $   164.4         $    21.3
_________________________________________________________________________
                                              ___________________________

</TABLE>


<PAGE> 100

Notes to Financial Statements (Continued)

5.  Investments (Continued)

The activity in the specific and general reserves as of December 31, 
1995 is summarized below:

<TABLE>
<CAPTION>
                            General
                            Reserve
             Balance at     Allocated to   Balance at    Charged
             December 31,   Experience     December 31,  to net     Charged                     Balance at
             1994, as       Rated          1994, as      realized   to other       Principal    December 31,
(Millions)   reported       Products (1)   adjusted      loss       accounts (2)   Write-offs   1995 (3)
____________________________________________________________________________________________________________
<S>          <C>            <C>            <C>           <C>        <C>            <C>          <C>

Supporting
discontinued
products     $  372.1       $      -       $  372.1      $      -   $   25.2       $ (109.8)    $  287.5

Supporting
experience
rated
products        156.1          208.5          364.6             -      (30.2)        (106.1)       228.3

Supporting 
remaining 
products        119.3              -          119.3          10.4          -          (40.6)        89.1    
             _______________________________________________________________________________________________
  Total
  continuing 
  operations $  647.5       $  208.5       $  856.0      $   10.4   $   (5.0)      $ (256.5)    $  604.9    
____________________________________________________________________________________________________________
             _______________________________________________________________________________________________

Supporting 
Discontinued 
Operations   $  136.6       $      -       $  136.6      $    6.4   $      -       $  (77.3)    $   65.7    
____________________________________________________________________________________________________________
             _______________________________________________________________________________________________
<FN>

(1)  The general reserve at December 31, 1994 excluded reserves of $208.5 million related to experience
     rated products.

(2)  Reflects additions to (releases of) reserves related to assets supporting experience rated products 
     and discontinued products which do not affect the company's results of operations.

(3)  Total reserves for continuing operations at December 31, 1995 include $361.2 million of specific 
     reserves and $243.7 million of general reserves.
</TABLE>

The company accrues interest income on impaired loans to the 
extent it is deemed collectible and the loan continues to perform 
under its original or restructured contractual terms.  Interest 
income on problem loans is generally recognized on a cash basis.  
Cash payments on loans in the process of foreclosure are generally 
treated as a return of principal.

Income earned (pretax) and received on the average recorded 
investment in impaired loans for the twelve months ended 
December 31, 1995 was as follows:

<TABLE>
<CAPTION>
                                      Average
                                      Impaired  Income    Income
(Millions)                            Loans     Earned    Received  
____________________________________________________________________
<S>                                   <C>       <C>       <C>

Supporting discontinued products      $  952.9  $   81.9  $   81.0
Supporting experience rated products     739.8      50.6      51.6
Supporting remaining products            292.5      21.6      22.1 
                                      _____________________________
  Total - continuing operations       $1,985.2  $  154.1  $  154.7 
___________________________________________________________________
                                      _____________________________

Supporting Discontinued Operations    $  227.0  $   12.2  $   12.2
___________________________________________________________________
                                      _____________________________

</TABLE>


<PAGE> 101

Notes to Financial Statements (Continued)

5.  Investments (Continued)

The carrying values of investments that were nonincome producing 
for the twelve months preceding the Balance Sheet date were as 
follows:

<TABLE>
<CAPTION>
(Millions)                             1995                         1994            
____________________________________________________________________________________
                              Continuing   Discontinued    Continuing   Discontinued
                              Operations   Operations      Operations   Operations  
                              __________   ____________    __________   ____________
<S>                           <C>          <C>             <C>          <C>

Debt securities               $    6.9     $     .6        $    5.5     $    2.4
Equity securities                    -         12.6            11.0          9.3
Mortgage loans                    57.9           .3            65.2         14.9
Real estate                       95.8         71.4           111.9         47.9
                              ______________________________________________________
  Total nonincome 
  producing assets            $  160.6     $   84.9        $  193.6     $   74.5    
____________________________________________________________________________________
                              ______________________________________________________
  Nonincome producing
  assets of discontinued
  products (included above)   $   33.9     $      -        $   68.0     $      -    
                              ______________________________________________________
                              ______________________________________________________

</TABLE>

Significant noncash investing and financing activities include 
acquisition of real estate through foreclosures (including in-
substance foreclosures) of mortgage loans amounting to 
$264 million in 1995, $649 million in 1994 and $278 million in 
1993 for continuing operations and $40 million in 1995, 
$59 million in 1994 and $17 million in 1993 for Discontinued 
Operations.

Disclosure of concentrations of credit risk for bonds and mortgage 
loans is incorporated herein by reference to Management's 
Discussion and Analysis of Financial Condition and Results of 
Operations on pages 42 through 55.

6.  Capital Gains and Losses on Investment Operations

Realized capital gains or losses are the difference between the 
carrying value and sale proceeds of specific investments sold. 
Provisions for impairments and changes in the fair value of real 
estate subsequent to foreclosure are also included in net realized 
capital gains or losses. Unrealized capital gains and losses on 
available for sale investments, after deducting amounts allocable 
to experience rated contractholders and discontinued products, and 
net of related taxes, are reflected in shareholders' equity.

Net realized capital gains allocable to experience rated 
contractholders of $96.5 million for the year ended December 31, 
1995 and net realized capital losses of $195.0 million and 
$180.1 million for the years ended December 31, 1994 and 1993, 
respectively, were deducted from net realized capital gains 
(losses) as reflected on the Consolidated Statements of Income, 
and an offsetting amount is reflected on the Consolidated Balance 
Sheets in policyholders' funds left with the company.


<PAGE> 102

Notes to Financial Statements (Continued)

6.  Capital Gains and Losses on Investment Operations (Continued)

Net realized capital gains (losses) on investments were as 
follows:

<TABLE>
<CAPTION>

(Millions)                      1995                     1994                    1993
                         _______________________ ________________________  _____________________
<S>                      <C>                     <C>                       <C>                 
                         Continuing Discontinued Continuing Discontinued Continuing Discontinued
                         Operations Operations   Operations Operations   Operations Operations  
                         __________ ____________ __________ ____________ __________ ____________
Debt securities           $    34.4  $  (38.0)    $  (42.3) $     9.7    $    375.8   $  230.5
Equity securities              18.2     239.5           .8       30.7          15.4       75.9
Mortgage loans                 (9.4)     (5.5)       (39.0)     (52.8)       (328.2)    (107.5)
Real estate                     3.5      28.7         30.0       12.2         (99.6)     (51.9)
Sales of subsidiaries             -     (43.3) (1)    (3.9)      20.8         (18.2)      27.0
Other                            .5     (25.8)         (.8)     (20.2)         (6.4)       4.0 
                          ______________________________________________________________________
  Pretax realized 
   capital gains (losses) $    47.2  $  155.6     $  (55.2) $      .4    $    (61.2)  $  178.0 
_______________________________________________________________________________________________
                          _____________________________________________________________________
  After tax realized
   capital gains (losses) $    29.5  $  106.0     $  (41.2) $    (1.4)   $    (42.0)  $  128.0 
_______________________________________________________________________________________________
<FN>

(1) A loss of $43.3 million ($22.5 million, after tax) is included in net realized
    capital losses in Discontinued Operations to reflect a write-down of the carrying value of
    Aetna Re-Insurance Company (U.K.) Ltd.
</TABLE>

In December 1995, the company completed the sale and 
securitization of $443 million of commercial mortgage loans 
supporting discontinued products.  Concurrent with the sale, the 
company retained approximately $108 million of subordinate and 
residual certificates which were classified as debt securities at 
December 31, 1995.  The net proceeds from the sale were 
approximately $338 million.

Proceeds from the sale of investments in available for sale, held 
for investment and trading debt securities and the related gross 
gains and losses on those sales were as follows:

<TABLE>
<CAPTION>

(Millions)                      1995                     1994                    1993
                         _______________________________________________________________________
<S>                      <C>                     <C>                       <C>                 
                         Continuing Discontinued Continuing Discontinued Continuing Discontinued
                         Operations Operations   Operations Operations   Operations Operations
                         __________ ____________ __________ ____________ __________ ____________
Proceeds on sales        $ 13,747.2 $ 3,871.0    $ 14,807.2 $ 4,210.3    $ 34,183.1 $  7,906.5
Gross gains                   124.0      56.5          62.3      66.5         441.0      257.8
Gross losses                   89.6      94.5         100.8      57.9          54.2       20.9
</TABLE>

Changes in shareholders' equity included changes in unrealized 
capital gains (losses), excluding changes in unrealized capital 
gains (losses) related to experience rated contractholders and 
discontinued products, for the periods as follows:

<TABLE>
<CAPTION>
(Millions)                                    1995           1994           1993       
_______________________________________________________________________________________
<S>                                           <C>            <C>            <C>

Continuing Operations:
  Equity securities                           $     41.3     $    (28.9)    $     22.2
  Debt trading securities                              -              -          (35.5)
  Debt securities available for sale               984.8         (867.9)         399.8
  Foreign exchange and other, net                  (23.3)         (82.5)          17.4
Discontinued Operations                            900.9         (910.5)         178.4 
                                              _________________________________________
   Subtotal                                      1,903.7       (1,889.8)         582.3
Increase (Decrease) in deferred federal
 income taxes                                      191.1         (170.1)         193.7 
                                              _________________________________________
Net changes in unrealized capital gains
 (losses)                                     $  1,712.6     $ (1,719.7)    $    388.6 
_______________________________________________________________________________________
                                              _________________________________________

</TABLE>

<PAGE> 103

Notes to Financial Statements (Continued)

6.  Capital Gains and Losses on Investment Operations (Continued)

Changes in unrealized capital gains (losses) for the periods 
exclude pretax changes in debt securities carried at amortized 
cost.  The unrecorded appreciation (depreciation) for continuing 
operations related to debt securities carried at amortized cost is 
the difference between estimated market and carrying values, and 
amounted to $(3.2) million and $125.8 million at December 31, 1994 
and 1993, respectively.  Such unrecorded appreciation 
(depreciation) includes amounts allocable to experience rated 
contractholders.  The change in unrecorded appreciation 
(depreciation) for such securities was $3.2 million, 
$(129.0) million and $(1,325.6) million in 1995, 1994 and 1993, 
respectively.

Shareholders' equity included the following unrealized capital 
gains (losses), which are net of amounts allocable to experience 
rated contractholders and amounts related to discontinued 
products, at December 31:

<TABLE>
<CAPTION>

(Millions)                                    1995         1994         1993       
___________________________________________________________________________________
<S>                                           <C>          <C>          <C>

Continuing Operations:  
  Equity securities:
    Gross unrealized capital gains            $     85.1   $    63.6     $    55.0
    Gross unrealized capital losses                (23.2)      (43.0)         (5.5)
                                              _____________________________________
                                                    61.9        20.6          49.5
  Debt securities available for sale:
    Gross unrealized capital gains                 574.9        72.4         420.0
    Gross unrealized capital losses                (58.2)     (540.5)        (20.2)
                                              _____________________________________
                                                   516.7      (468.1)        399.8
  Foreign exchange and other, net                  (66.3)      (43.0)         39.5
Discontinued Operations                            474.0      (426.9)        483.6
Deferred federal income taxes                      345.2       154.1         324.2 
                                              _____________________________________
  Net unrealized capital gains (losses)       $    641.1   $(1,071.5)    $   648.2 
___________________________________________________________________________________
                                              _____________________________________
</TABLE>

At December 31, 1994, $749.0 million of net unrealized capital 
losses (of which $293.7 million related to Discontinued 
Operations) primarily on available for sale debt and equity 
securities were reflected in shareholders' equity without deferred 
tax benefits.  An additional valuation allowance of $213 million 
was established at December 31, 1994 for potential loss of tax 
benefits on net unrealized capital losses on assets allocable to 
experience rated contractholders.  (Please refer to Note 10 for 
discussion of the tax treatment for unrealized capital losses on 
available for sale debt and equity securities.)

<PAGE> 104

Notes to Financial Statements (Continued)

7.  Net Investment Income

Net investment income includes amounts allocable to experience 
rated contractholders of $1.5 billion, $1.4 billion and $1.6
billion for the years ended December 31, 1995, 1994 and 1993, 
respectively.  Interest credited to contractholders is included 
in current and future benefits.

Sources of net investment income were as follows:

<TABLE>
<CAPTION>

(Millions)                      1995                     1994                     1993
                       _______________________  _______________________ _______________________
                       Continuing Discontinued  Continuing Discontinued Continuing Discontinued
                       Operations Operations    Operations Operations   Operations Operations
                       __________ ____________  __________ ____________ __________ ____________
<S>                    <C>                      <C>                     <C>

Debt securities        $ 2,275.9  $   683.2     $  2,250.0 $     632.1  $ 2,276.8   $    726.6
Equity securities           22.0       31.3           29.2        27.7       43.1         12.7
Short-term investments      25.1         .8           14.0           -       41.9         13.4
Mortgage loans             962.6      121.8        1,146.8       154.4    1,397.7        189.1
Real estate                306.4       56.6          302.0        59.2      308.4         70.1
Policy loans                30.6          -           28.0           -       29.9            -
Other                      133.2       22.6           86.2        10.1      146.8         13.4
Cash equivalents           151.8       48.3          109.1        26.0       65.0         11.7 
                       ________________________________________________________________________
Gross investment 
   income                3,907.6      964.6        3,965.3       909.5    4,309.6      1,037.0
Less investment
   expenses                332.5       62.9          333.9        77.4      343.0         84.6 
                       ________________________________________________________________________
  Net investment 
   income              $ 3,575.1  $   901.7     $  3,631.4 $     832.1  $ 3,966.6   $    952.4 
_______________________________________________________________________________________________
                       ________________________________________________________________________
</TABLE>

8.  Dividend Restrictions and Shareholders' Equity

The amount of dividends that may be paid to shareholders in 1996 
without prior approval by the Insurance Commissioner of the State 
of Connecticut is $659.9 million.  Dividend payments by the 
domestic insurance subsidiaries of Aetna Life and Casualty Company 
are subject to similar restrictions in Connecticut and other 
states, and are limited in 1996 to approximately $657.3 million in 
the aggregate of which $216.6 million relates to Discontinued 
Operations (the sale agreement with Travelers prohibits the 
payment of dividends from the property-casualty subsidiaries).  
During 1995, subsidiaries paid $451.7 million in dividends to 
Aetna Life and Casualty Company, none of which relates to 
Discontinued Operations.

The amounts of statutory net loss for the years ended and 
shareholders' equity as of December 31 were as follows:

<TABLE>
<CAPTION>
(Millions)                                  1995           1994           1993     
___________________________________________________________________________________
<S>                                         <C>            <C>            <C>

Statutory net loss                          $   (13.4)     $  (389.8)     $   (40.7)
___________________________________________________________________________________ 
                                            _______________________________________ 

Statutory shareholders' equity              $ 4,275.1      $ 3,996.5
____________________________________________________________________
                                            ________________________
</TABLE>

As of December 31, 1995, the company does not utilize any 
statutory accounting practices which are not prescribed by 
insurance regulators that, individually or in the aggregate, 
materially affect statutory shareholders' equity.

<PAGE> 105

Notes to Financial Statements (Continued)

9.  Debt

<TABLE>
<CAPTION>

(Millions)                                            1995         1994     
____________________________________________________________________________
<S>                                                   <C>          <C>

Long-term debt:
 Domestic:
  Eurodollar Notes, 9 1/2% due 1995                   $       -    $   100.2
  Notes, 8 5/8% due 1998                                   99.8         99.8
  Notes, 6 3/8% due 2003                                  198.9        198.9
  Debentures, 6 3/4% due 2013                             198.4        198.4
  Eurodollar Notes, 7 3/4% due 2016                        63.5         63.5
  Debentures, 8% due 2017                                 199.1        199.1
  Mortgage Notes and Other Notes, 3%-11%
   due in varying amounts to 2018                          13.1          5.9
  Debentures, 7 1/4% due 2023                             198.3        198.3
 International:
  Mortgage Notes, 6 1/2%-11 7/8% due in
   varying amounts to 2006                                 18.0         15.1
                                                      ______________________
    Total                                             $   989.1    $ 1,079.2
____________________________________________________________________________
                                                      ______________________
</TABLE>

At December 31, 1995, $389.6 million of short-term borrowings were 
outstanding.  Total unused committed bank lines available to the 
company at December 31, 1995 amounted to $1,020 million, including 
credit facilities aggregating $1.0 billion with a group of 
worldwide banks.  One $500 million facility terminates in July 
1996, which the company intends to extend.  Another $500 million 
facility terminates in July 1999.  Various interest rate options 
are available under each facility and any borrowings mature on the 
expiration date of the applicable credit commitment.  The company 
pays facility fees ranging from .08% to .375% per annum under the 
short-term credit agreement and from .1% to .5% per annum under 
the medium-term credit agreement, depending upon the company's 
long-term senior unsecured debt rating.  The commitments require 
the company to maintain shareholders' equity, excluding net 
unrealized capital gains and losses, of at least $5 billion.  
These facilities also support the company's commercial paper 
borrowing program.

During 1993, the company issued $200 million of 6 3/8% Notes due 
in 2003, $200 million of 6 3/4% Debentures due in 2013 and 
$200 million of 7 1/4% Debentures due in 2023.  The proceeds 
were primarily used to repay commercial paper borrowings, a 
significant portion of which was incurred in connection with the 
retirement of debt discussed below.  The remaining proceeds were 
used for general corporate purposes.  Pursuant to shelf 
registration statements declared effective by the Securities and 
Exchange Commission ("SEC"), the company may offer and sell up 
to an additional $550 million of various types of securities.  
(Please refer to Note 11.)

During 1993, the company redeemed $200 million principal amount 
of its 8 1/8% Debentures whose scheduled maturity was 2007.  The 
company recognized an after tax extraordinary loss on the 
debenture redemption of $4.7 million (after taxes of 
$2.4 million).  Additionally, $137 million of the company's 7 
3/4% Eurodollar Notes due 2016 were redeemed at par at the 
option of the holders thereof during 1993.

The 8% Debentures due 2017 are subject to various redemption 
options beginning on January 15, 1997.

<PAGE> 106

Notes to Financial Statements (Continued)

9.  Debt (Continued)

Aggregate maturities of long-term debt and sinking fund 
requirements for 1996 through 2000 for continuing operations are 
$11.9 million, $6.4 million, $100.0 million, $1.2 million and 
$3.0 million, respectively, and $866.6 million thereafter.

Total interest expense for continuing operations was 
$115.9 million, $98.6 million and $77.4 million in 1995, 1994 and 
1993, respectively, and interest paid was $122.7 million, 
$98.7 million and $74.1 million in 1995, 1994 and 1993, 
respectively.

10.  Federal and Foreign Income Taxes

In August 1993, the Omnibus Budget Reconciliation Act of 1993 
("OBRA") was enacted, which resulted in an increase in the federal 
corporate tax rate from 34% to 35% retroactive to January 1, 1993.  
The enactment of OBRA resulted in an increase of $27.4 million, of 
which $23.0 million related to Discontinued Operations, in the 
company's deferred tax asset.

Income tax expense (benefits) consists of:

<TABLE>
<CAPTION>
(Millions)                      1995                     1994                     1993
                       _______________________  _______________________ _______________________
                       Continuing Discontinued  Continuing Discontinued Continuing Discontinued
                       Operations Operations    Operations Operations   Operations Operations
                       __________ ____________  __________ ____________ __________ ____________
<S>                    <C>                      <C>                     <C>

Current taxes 
 (benefits):
  Income - federal 
   taxes               $   225.7   $  (156.7)   $   267.8  $      6.4   $   187.1  $     (139.8)
  Income - foreign 
   taxes                     8.0          .9          6.6         2.0         1.6            .4
  Realized capital 
   gains (losses)           34.4        65.6       (292.5)      (47.5)      (37.9)         63.3
                       ________________________________________________________________________
                           268.1       (90.2)       (18.1)      (39.1)      150.8         (76.1)
Deferred taxes 
 (benefits):
  Income - federal 
   taxes                   (10.2)      (55.5)       (44.2)      (37.2)     (587.3)        (30.4)
  Income - foreign 
   taxes                     9.9         (.1)          .5         (.3)       (1.4)            -
  Realized capital 
   gains (losses)          (15.5)      (16.3)       279.9        49.3        25.5         (13.2)
                       ________________________________________________________________________ 
                           (15.8)      (71.9)       236.2        11.8      (563.2)        (43.6)
                       ________________________________________________________________________ 
Total                  $   252.3   $  (162.1)   $   218.1  $    (27.3)  $  (412.4)  $    (119.7)
_______________________________________________________________________________________________ 
                       ________________________________________________________________________ 

</TABLE>
        

<PAGE> 107

Notes to Financial Statements (Continued)

10.  Federal and Foreign Income Taxes (Continued)

Income tax expense (benefits)on income (loss) was different from 
the amount computed by applying the federal income tax rate to 
income (loss) before income tax expense (benefits) for the 
following reasons:

<TABLE>
<CAPTION>
(Millions)                      1995                     1994                     1993
                       _______________________  _______________________ _______________________
                       Continuing Discontinued  Continuing Discontinued Continuing Discontinued
                       Operations Operations    Operations Operations   Operations Operations
                       __________ ____________  __________ ____________ __________ ____________
<S>                    <C>                      <C>                     <C>

Income (Loss) from U.S. 
 operations            $   544.8   $  (384.3)   $   502.2  $      30.8  $(1,079.2) $     (105.7)
Income from non-U.S. 
 operations                181.4           -        125.3            -       64.5             -
                       ________________________________________________________________________
  Income (Loss) before 
   taxes                   726.2      (384.3)       627.5         30.8   (1,014.7)       (105.7)
Tax rate                      35%         35%          35%          35%        35%           35%
                       ________________________________________________________________________ 
Application of the tax 
 rate                      254.2      (134.5)       219.6         10.8     (355.2)        (37.0)
Tax effect of:
  Tax-exempt interest       (4.3)      (16.2)        (7.8)       (28.9)     (12.9)        (42.0)
  Foreign operations        10.1        (5.2)        (1.8)          .1      (47.6)           .7
  Excludable dividends      (9.8)       (6.2)        (8.8)        (6.7)      (8.5)        (12.0)
  Tax rate change on 
   deferred assets
   and liabilities             -           -            -            -       (2.0)        (22.0)
  Goodwill                   5.5           -          8.6            -        6.8             -
  Other, net                (3.4)          -          8.3         (2.6)       7.0          (7.4)
                       ________________________________________________________________________ 
Income taxes (benefits) 
on income (loss)       $   252.3   $  (162.1)   $   218.1  $     (27.3) $  (412.4) $     (119.7)            
_______________________________________________________________________________________________             
                       ________________________________________________________________________             
</TABLE>

The tax effects of temporary differences that give rise to 
deferred tax assets and deferred tax liabilities at December 31 
are presented below:

<TABLE>
<CAPTION>
(Millions)                                    1995                     1994          
                                     _______________________  _______________________
<S>                                  <C>                      <C>
                                     Continuing Discontinued  Continuing Discontinued
                                     Operations Operations    Operations Operations
                                     __________ ____________  __________ ____________
Deferred tax assets:
  Insurance reserves                 $   560.8  $   814.4     $   385.5  $    756.6
  Reserve for loss on
   discontinued products                 325.4          -         344.1           -
  Reserve for severance and  
   facilities expenses                    13.9        5.6          31.3        26.3
  Impairment reserves                     49.2        1.8          63.7        49.5
  Other postretirement benefits          229.4          -         230.6           -
  Net unrealized capital losses              -          -         462.1       139.5
  Net operating loss carryforward         79.4      122.2         111.8       113.2
  Other                                  (18.2)      39.5          (1.7)        9.4
                                     ______________________________________________
Total gross assets                     1,239.9      983.5       1,627.4     1,094.5
Less valuation allowance                  34.3          -         444.5       102.1
                                     ______________________________________________
Assets net of valuation allowance      1,205.6      983.5       1,182.9       992.4

Deferred tax liabilities:
  Deferred policy acquisition costs      571.8      107.0         446.5       110.5
  Unrealized losses allocable to
   experience rated contracts                -          -         213.0           -
  Net unrealized capital gains           282.8      220.4             -           -
  Market discount                         62.1       11.2          73.9        17.1
  Other                                   17.4        2.6          45.3         2.3
                                     ______________________________________________
Total gross liabilities                  934.1      341.2         778.7       129.9
                                     ______________________________________________
  Net deferred tax asset             $   271.5  $   642.3     $   404.2  $   862.5 
____________________________________________________________________________________
                                     _______________________________________________

</TABLE>

<PAGE> 108

Notes to Financial Statements (Continued)

10.  Federal and Foreign Income Taxes (Continued)

The 1995 and 1994 valuation allowance relates to future tax 
benefits of $27.5 million and $22.9 million, respectively, on 
purchased domestic net operating losses; $6.8 million and 
$48.5 million, respectively, on foreign net operating losses and 
$475.2 million in 1994 on unrealized capital losses, the 
realization of which are uncertain.

The valuation allowance on foreign net operating losses was 
reduced primarily due to a tax rate reduction in the foreign 
jurisdiction; a corresponding reduction in the deferred tax asset 
resulted in no impact on net income.

Net unrealized capital gains and losses are presented in 
shareholders' equity net of deferred taxes.  At December 31, 1994, 
$749 million of net unrealized capital losses primarily on 
available for sale debt and equity securities were reflected in 
shareholders' equity without deferred tax benefits.  As of 
December 31, 1995, no valuation allowance was required for 
unrealized capital gains and losses.  The reversal of the 
valuation allowance had no impact on net income in 1995.

Management believes that it is more likely than not that the 
company will realize the benefit of the net deferred tax asset of 
$913.8 million of which $642.3 million related to Discontinued 
Operations. The company's election of special estimated tax 
payments in years 1989 through 1994 assures realizability of a 
substantial portion of the deferred tax asset from the discounting 
of property-casualty reserves included in Discontinued Operations.  
The company has more than 15 years to generate sufficient taxable 
income to cover the reversal of its temporary differences due to 
the long-term reversal patterns of these differences.  Because of 
the company's long-term history of taxable income, which is 
projected to continue, and the availability of significant tax 
planning strategies, such as converting tax-exempt bonds to 
taxable bonds, the company expects sufficient taxable income in 
the future to realize the net deferred tax asset.

The net deferred tax asset includes $3.5 million related to the 
company's expected utilization of its foreign net operating loss 
carryforward and $163.8 million related to the company's expected 
utilization of its current U.S. net operating loss carryforward of 
$468.0 million, $162.6 million which expires in the year 2008 of 
which $111.2 million relates to Discontinued Operations, 
$285.1 million which expires in the year 2009 of which 
$226.3 million relates to Discontinued Operations and $20.3 
million which expires in 2010 of which $11.7 million relates to 
Discontinued Operations.

The company has not recognized deferred taxes related to the 
estimated cumulative amount of undistributed earnings of 
approximately $225 million on its controlled foreign corporations 
because the company does not expect to repatriate these earnings.  
A deferred tax liability will be recognized when the company 
expects that it will recover these undistributed earnings in a 
taxable manner, such as through a receipt of dividends or a sale 
of the investment.


<PAGE> 109

Notes to Financial Statements (Continued)

10.  Federal and Foreign Income Taxes (Continued)

The "Policyholders' Surplus Account," which arose under prior tax 
law, is generally that portion of a life insurance company's 
statutory income that has not been subject to taxation.  As of 
December 31, 1983, no further additions could be made to the 
Policyholders' Surplus Account for tax return purposes under the 
Deficit Reduction Act of 1984.  The balance in such account was 
$857.2 million at December 31, 1995.  This amount would be taxed 
only under certain conditions.  No income taxes have been provided 
on this amount since management believes the conditions under 
which such taxes would become payable are remote.

The Internal Revenue Service (the "Service") has completed 
examination of the consolidated federal income tax returns of 
Aetna Life and Casualty and Affiliated Companies through 1986.  
Discussions are being held with the Service with respect to 
proposed adjustments.  The Service has commenced its examination 
for the years 1987 through 1990.  However, management believes 
there are adequate defenses against, or sufficient reserves to 
provide for, such challenges.

The company paid net federal income taxes for continuing 
operations of $127.1 million in 1995 and received net federal 
income tax refunds of $13.3 million in 1994 and paid net federal 
income taxes of $242.8 million in 1993.

The company received net federal income tax refunds for 
Discontinued Operations of $148.4 million, $60.8 million and 
$141.2 million in 1995, 1994 and 1993, respectively.

11.  Minority Interest in Preferred Securities of Subsidiary

On November 22, 1994, Aetna Capital L.L.C. ("ACLLC"), a wholly 
owned subsidiary of the company, issued $275 million (11,000,000 
shares) of 9 1/2% Cumulative Monthly Income Preferred Securities, 
Series A, on which payments are guaranteed to a certain extent by 
the company on a subordinated basis. The securities are 
redeemable, at the option of ACLLC with the company's consent, in 
whole or in part, from time to time, on or after November 30, 
1999, or at any time under certain limited circumstances related 
to tax events, at a redemption price of $25 per security plus 
accumulated and unpaid dividends to the redemption date. The 
securities are scheduled to become due and payable in 2024.  The 
maturity date may be changed under certain circumstances.

ACLLC has loaned the proceeds from the preferred stock issuance 
and the common capital contributions to the company.  In return, 
the company issued approximately $348 million principal amount of 
9 1/2% subordinated debentures to ACLLC due in 2024.  Interest on 
these debentures is payable monthly, and under certain 
circumstances, principal may be due prior to or later than the 
original maturity date.  This loan is eliminated in the 
Consolidated Balance Sheets.

ACLLC may offer and sell up to an additional $225 million of 
preferred securities under a shelf registration statement declared 
effective by the SEC.


<PAGE> 110

Notes to Financial Statements (Continued)

12.  Common Stock

At December 31, 1995 and 1994, 3,802,256 common shares were 
reserved for issuance under the dividend reinvestment plan, 
10,732,316 and 6,702,878 common shares, respectively, were 
reserved for the stock option plans, and 946,675 common shares 
were reserved for other benefit plans.

In 1995 and 1994, the company did not acquire any shares of its 
common stock.

Pursuant to the company's amended Share Purchase Rights Plan, a 
dividend of one share purchase right (a "Right") was made payable 
for each share of Aetna Life and Casualty Common Capital Stock 
("Common Stock") outstanding on November 7, 1989, and one Right 
will attach to each share of Common Stock subsequently issued, 
prior to the time at which the Rights become exercisable, expire 
or are redeemed.

The Rights trade with the Common Stock until they become 
exercisable.  The Rights become exercisable 10 days after:  (i) a 
public announcement that a person or group ("person") has acquired 
15% or more of the outstanding shares of Common Stock or, 10% or 
more of the outstanding shares of Common Stock if such person is 
declared by the Board of Directors to be an "adverse person" 
("triggering acquisition"); or (ii) a person commences a tender 
offer which, upon consummation, could result in such person owning 
15% or more of the Common Stock; or (iii), in either event, such 
later date as the Board of Directors may determine.

Upon becoming exercisable, each Right will entitle the holder 
thereof (the "Holder") to purchase one one-hundredth of a share of 
Aetna Life and Casualty Company's Class B Voting Preferred Stock, 
Series A (a "Fractional Preferred Share") at a price of $200 (the 
"Exercise Price").  Each Fractional Preferred Share has dividend, 
voting and liquidation rights designed to make it approximately 
equal in value to one share of Common Stock.  Under certain 
circumstances, including a triggering acquisition, each Right 
(other than Rights that were or are owned by the acquirer) 
thereafter will entitle the Holder to purchase Common Stock worth 
twice the Exercise Price.  Under certain circumstances, including
the acquisition of Aetna Life and Casualty Company in a merger 
(following a triggering acquisition), each Right thereafter will 
entitle the Holder to purchase equity securities of the acquirer 
at a 50% discount.

Under certain circumstances, Aetna Life and Casualty Company may 
redeem all of the Rights at a price of $.01 per Right.  The Rights 
will expire on November 7, 1999, unless earlier redeemed.  The 
Rights have no dilutive effect on earnings per share until 
exercised.  Aetna Life and Casualty Company has authorized 
2,500,000 Preferred Shares for issuance upon exercise of the 
Rights.

<PAGE> 111

Notes to Financial Statements (Continued)

13.  Participating Policyholders' Interests

Under participating life insurance contracts issued by the 
company, the policyholder is entitled to share in the earnings of 
such contracts.  This business is accounted for in the company's 
Consolidated Financial Statements on a statutory basis since any 
adjustments to policy acquisition costs and reserves on this 
business would have no effect on the company's net income or 
shareholders' equity.  Premiums and assets allocable to the 
participating policyholders were as follows:

<TABLE>
<CAPTION>

(Millions)                                  1995         1994         1993    
______________________________________________________________________________
<S>                                         <C>          <C>          <C>

Premiums                                    $   50.1     $   52.0     $   52.4 
_______________________________________________________________________________

Assets                                      $  688.3     $  700.8     $  704.8 
_______________________________________________________________________________
</TABLE>

14.  Benefit Plans

Pension Plans - The company has noncontributory defined benefit 
pension plans covering substantially all employees and certain 
agents.  The plans provide pension benefits based on years of 
service and average annual compensation (measured over 60 
consecutive months of highest earnings in a 120-month period).  
Contributions are determined by using the Projected Unit Credit 
Method and, for qualified plans subject to ERISA requirements, are 
limited to the amounts that are currently deductible for tax 
reporting purposes.

Components of the net periodic pension cost were as follows:

<TABLE>
<CAPTION>

(Millions)                                    1995         1994         1993    
________________________________________________________________________________
<S>                                           <C>          <C>          <C>

Return on plan assets                         $  427.5     $    8.2     $  178.7
Service cost - benefits earned
 during the period                               (86.7)       (92.7)       (82.2)
Interest cost on projected
 benefit obligation                             (192.9)      (175.2)      (169.3)
Net amortization and deferral                   (222.0)       202.3         31.3 
_________________________________________________________________________________

Net periodic pension cost                     $  (74.1)    $  (57.4)    $  (41.5)
_________________________________________________________________________________

</TABLE>

<PAGE> 112

Notes to Financial Statements (Continued)

14.  Benefit Plans (continued)

The measurement dates used to determine the funded status of the 
plans were September 30, 1995 and 1994. The funded status of plans 
for which assets exceeded accumulated benefits was as follows:

<TABLE>
<CAPTION>

(Millions)                                    1995         1994     
____________________________________________________________________
<S>                                           <C>          <C>

Actuarial present value of vested
 benefit obligation                           $ 2,451.0    $ 1,930.3
                                                                    
____________________________________________________________________
Actuarial present value of
 accumulated benefit obligation               $ 2,472.1    $ 1,952.1
                                                                    
____________________________________________________________________
Plan assets at fair value                     $ 2,506.3    $ 2,176.4
Actuarial present value of 
 projected benefit obligation                   2,650.5      2,333.3
                                              ______________________
Plan assets less than
 projected benefit obligation                    (144.2)      (156.9)
Unrecognized net loss                             129.1        216.7
Unrecognized service cost - prior
 period                                             7.5          9.1
Unrecognized net asset at date of
 adoption of FAS No. 87                           (30.1)       (58.2)
                                              ______________________ 

(Accrued) prepaid pension cost                $   (37.7)   $    10.7
____________________________________________________________________
                                              ______________________
</TABLE>

At 1995 and 1994, nonfunded plans had projected benefit 
obligations of $166.5 million and $130.1 million, respectively.  
The accumulated benefit obligations at 1995 and 1994 related to 
these plans were $155.6 million and $105.3 million, respectively, 
and the related accrued pension cost was $121.2 million and 
$107.9 million, respectively.

The weighted average discount rate was 7.5% for 1995, 8.0% for 
1994 and 7.5% for 1993.  The expected long-term rate of return on 
plan assets was 8.5% for 1995 and 1994 and 9.0% for 1993.  The 
rate of increase in future compensation was 4.5% for 1995, 5.0% 
for 1994 and 4.5% for 1993.  The future annual cost-of-living 
adjustment was 3.0% for 1995, 1994 and 1993.

All of the assets are held in trust and administered under an 
Immediate Participation Guarantee Contract issued by Aetna Life 
Insurance Company.  Assets are held in the general account of 
Aetna Life Insurance Company and in various separate accounts.

Postretirement Benefits - In addition to providing pension 
benefits, the company currently provides certain health care and 
life insurance benefits for retired employees.  A comprehensive 
medical and dental plan is offered to all full-time employees 
retiring at age 50 with 15 years of service or at age 65 with 10 
years of service.  Retirees are generally required to contribute 
to the plans based on their years of service with the company.

In January 1994, the company announced a modification of its 
postretirement benefit plan to cap the portion of the cost paid by 
the company relating to medical and dental benefits for 
individuals retiring after March 1, 1994.

<PAGE> 113

Notes to Financial Statements (Continued)

14.  Benefit Plans (Continued)

Components of the net periodic postretirement benefit cost were as 
follows:

<TABLE>
<CAPTION>
(Millions)                                    1995         1994         1993
_________________________________________________________________________________
<S>                                           <C>          <C>          <C>

Service cost - benefits earned
 during the period                            $    (8.3)   $    (8.6)   $   (19.0)
Interest cost                                     (34.7)       (34.2)       (42.9)
Net amortization                                   28.3         31.2         11.7
Return on plan assets                               2.0          3.2          3.1
                                              ___________________________________

Net periodic postretirement
 benefit cost                                 $   (12.7)   $    (8.4)   $   (47.1)
_________________________________________________________________________________ 
                                              ___________________________________ 
</TABLE>

The measurement dates used to determine the funded status of the 
postretirement benefit plans were September 30, 1995 and 1994. The 
funded status of the plans was as follows:

<TABLE>
<CAPTION>
(Millions)                                    1995         1994     
____________________________________________________________________
<S>                                           <C>          <C>

Actuarial present value of accumulated
  postretirement benefit obligation:
   Retirees                                   $   313.5    $   285.2
   Fully eligible active employees                 70.9         64.3
   Active employees not eligible to
    retire                                        107.6         97.2
                                              ______________________
Total                                             492.0        446.7
Plan assets at fair value                          54.3         48.1
                                              ______________________
Accumulated postretirement benefit
 obligation in excess of plan assets              437.7        398.6
Unrecognized net gain                              24.8         43.9
Prior service cost                                173.6        204.3
____________________________________________________________________

Accrued postretirement benefit cost           $   636.1    $   646.8
____________________________________________________________________
                                              ______________________
</TABLE>

The weighted average discount rates were 7.5% for 1995, 8.0% for 
1994 and 7.5% for 1993.  The health care cost trend rate for the 
1995 valuation decreased gradually from 10.5% for 1996 to 5.5% by 
the year 2005.  For the 1994 valuation, the rates decreased 
gradually from 11.5% for 1995 to 5.5% by the year 2005.  
Increasing the health care cost trend rate by one percentage point 
would increase the accumulated postretirement benefit obligation 
at 1995 by $32.3 million and would increase the net periodic 
postretirement benefit cost for 1995 by $3.0 million (pretax).

It is the company's practice to fund amounts for postretirement 
life insurance benefits to the extent the contribution is 
deductible for federal income taxes.  The plan assets are held in 
trust and administered by Aetna Life Insurance Company.  The 
assets are in the general account of Aetna Life Insurance Company, 
and the expected rate of return on the plan assets was 7% for 
1995, 1994 and 1993.

Incentive Savings Plan - Substantially all employees are eligible 
to participate in a savings plan under which designated 
contributions, which may be invested in common stock of Aetna Life 
and Casualty Company or certain other investments, are matched, up 
to 5% of compensation, by the company.  Pretax charges to 
operations (including continuing and Discontinued Operations) for 
the incentive savings plan were $60.0 million, $59.9 million and 
$58.9 million for 1995, 1994 and 1993, respectively.  The Plan 
trustee held 5,015,075 shares, 6,380,355 shares and 5,996,806 
shares of Aetna Life and Casualty Company's common stock for Plan 
participants at the end of 1995, 1994 and 1993, respectively.


<PAGE> 114

Notes to Financial Statements (Continued)

14.  Benefit Plans (Continued)

1994 Stock Incentive Plan - The company's 1994 stock incentive 
plan replaced the 1984 stock option plan.  The 1994 plan provides 
for stock options (see (1) Stock Options), and deferred 
contingent common stock or cash awards (see (2)Incentive Units) to 
certain key employees. The maximum number of shares of common 
stock issuable under the 1994 Stock Incentive Plan is 8 million, of
which options and units to receive 2,374,540 and 1,502,900 shares were
granted during 1995 and 1994, respectively.  The total amount charged to
operations (including continuing and Discontinued Operations) for the 
1994 Stock Incentive Plan, which was determined from factors relating to
various performance measures, was $36.3 million and $19.2 million,
pretax, for the years ended December 31, 1995 and 1994, respectively.

(1) Stock Options - Executive and middle management employees 
may be granted options to purchase common stock of the company at or
above the market price on the date of grant.  Certain options granted 
prior to 1992 contain stock appreciation rights permitting the 
employee to exercise those rights and receive the excess of fair 
market value at the date of exercise over the grant date fair 
market value in cash and/or stock.

Stock option transactions under the 1994 Stock Incentive Plan and 
the 1984 Stock Option Plan are summarized below:

<TABLE>
<CAPTION>
                                                            Range of
                                         Number        Option Prices
                                      of Shares            Per Share
____________________________________________________________________
<S>                                   <C>              <C>
                                                          

Outstanding at December 31, 1992         5,789,649     $29.50-$61.50
       Granted                           1,034,560     $46.75-$55.00
       Exercised                        (2,025,696)    $29.50-$61.50
       Canceled or expired                (188,990)    $29.50-$61.50
____________________________________________________________________
Outstanding at December 31, 1993         4,609,523     $29.50-$61.50
       Granted                           1,140,100     $46.50-$55.25
       Exercised                          (464,790)    $29.50-$61.50
       Canceled or expired                (211,875)    $29.50-$61.50
____________________________________________________________________
Outstanding at December 31, 1994         5,072,958     $41.50-$61.50
       Granted                           2,131,100     $50.50-$72.25
       Exercised                        (2,198,219)    $41.50-$61.50
       Canceled or expired                (122,178)    $42.13-$61.50
____________________________________________________________________
Outstanding at December 31, 1995         4,883,661     $41.50-$72.25
____________________________________________________________________
Range of expiration dates             6/96-10/2005                  
____________________________________________________________________
Options exercisable at
  December 31, 1995                      2,110,474                  
____________________________________________________________________
</TABLE>

(2) Incentive Units - Executive and middle management employees 
may be granted incentive units under the 1994 Stock Incentive 
Plan, which are rights to receive common stock or cash at the end 
of a vesting period (currently 1996 and 1998) conditioned upon the 
employee's continued employment during that period and achievement 
of company performance goals.  The incentive unit holders are not 
entitled to dividends during the vesting period.

<PAGE> 115

Notes to Financial Statements (Continued)

14.  Benefit Plans (Continued)

Incentive unit transactions related to the 1994 Stock Incentive 
Plan under which holders may be entitled to receive common stock, 
are summarized below:

<TABLE>
<CAPTION>
                                                Number
                                             of Shares 
_______________________________________________________
<S>                                            <C>
                                                  

  Granted                                      362,800
  Canceled or expired                          (17,000)
                                             __________
Outstanding at December 31, 1994               345,800
  Granted                                      243,440
  Vested                                       (24,320)
                                             __________
Outstanding at December 31, 1995               564,920 
                                             __________
                                             __________
</TABLE>

15.  Segment Information (1)(2)(3)(4)(5)

Summarized financial information for the company's principal 
operations was as follows:

<TABLE>
<CAPTION>

(Millions)                                       1995      1994         1993
__________________________________________________________________________________
<S>                                              <C>       <C>          <C>

Revenue:
  Aetna Health Plans                             $ 7,615.4 $ 7,139.1    $ 6,106.0
  Aetna Life Insurance & Annuity                   1,624.2   1,437.4      1,395.3
  International                                    1,459.8   1,297.0      1,279.3
  Large Case Pensions                              2,268.9   2,355.2      2,566.0
  Corporate: Other                                     9.7      (9.7)        (6.9)
                                                 _________________________________
     Total revenue                               $12,978.0 $12,219.0    $11,339.7 
__________________________________________________________________________________
                                                 _________________________________

Income (Loss) from continuing operations 
 before income taxes, extraordinary item 
 and cumulative effect adjustments:
  Aetna Health Plans                             $   454.4 $   538.1    $   414.9
  Aetna Life Insurance & Annuity                     294.8     235.0        173.3
  International                                      127.3      98.8          2.2
  Large Case Pensions                                132.7      81.1     (1,274.2)
  Corporate:  Interest                              (108.3)    (94.8)       (69.3)
              Other                                 (174.7)   (230.7)      (261.6)
                                                 _________________________________
  Total income (loss) from continuing
   operations before income taxes,
   extraordinary item and
   cumulative effect adjustments                 $   726.2 $   627.5    $(1,014.7)
__________________________________________________________________________________
                                                 _________________________________

Net income (loss):
  Aetna Health Plans                             $   286.0 $   341.7    $   272.2
  Aetna Life Insurance & Annuity                     198.0     159.1        111.4
  International                                       86.6      71.2         55.0
  Large Case Pensions                                 89.2      54.4       (822.3)
  Corporate:  Interest                               (70.4)    (60.5)       (44.7)
              Other                                 (115.5)   (156.5)      (173.9)
                                                 _________________________________
Income (Loss) from continuing operations
 before extraordinary item and
 cumulative effect adjustments                       473.9     409.4       (602.3)
  Income (Loss) from Discontinued Operations,
   net of tax                                       (222.2)     58.1        290.3 
                                                 _________________________________
  Income (Loss) before extraordinary
   item and cumulative effect
   adjustments                                       251.7     467.5       (312.0)
  Extraordinary loss on debenture redemption             -         -         (4.7)
  Cumulative effect adjustments                          -         -        (49.2)
                                                 _________________________________
Net income (loss)                                $   251.7 $   467.5    $  (365.9)
__________________________________________________________________________________
                                                 _________________________________

</TABLE>

<PAGE> 116

Notes to Financial Statements (Continued)

15.  Segment Information (1)(2)(3)(4)(5) (Continued)

<TABLE>
<CAPTION>

(Millions)                                1995          1994      
__________________________________________________________________
<S>                                       <C>           <C>

Assets:
  Aetna Health Plans                      $  6,784.0    $  6,184.7
  Aetna Life Insurance & Annuity            27,509.6      21,318.2
  International                              4,383.8       4,532.9
  Large Case Pensions                       40,833.4      40,525.1
  Corporate                                    880.1        (241.5)
  Discontinued Operations, net               3,932.8       3,167.3 
                                          _________________________
Total assets                              $ 84,323.7    $ 75,486.7 
___________________________________________________________________
                                          _________________________
<FN>

(1) The 1993 results from continuing operations before extraordinary item and cumulative effect
    adjustments include an after-tax loss on the discontinuance of fully guaranteed large case 
    pension products of $825.0 million ($1,270.0 million pretax).  This loss affected the Large
    Case Pensions segment only.

(2) Assets at December 31, 1995 and 1994 include $10.6 billion and $12.4 billion, respectively, 
    of assets attributable to discontinued products. Discontinued products are included in the 
    Large Case Pensions segment.

(3) The 1993 results from continuing operations before extraordinary item and cumulative effect 
    adjustments include a net benefit of $21.8 million related to a change in the federal 
    corporate tax rate from 34% to 35%.  Of the $21.8 million benefit, $2.9 million reduced Aetna
    Health Plans results, $1.8 million reduced Large Case Pensions results, $4.4 million reduced
    Aetna Life Insurance & Annuity results, $.6 million increased International results, 
    $7.6 million increased Corporate results, and $23.0 million increased results from
    Discontinued Operations.

(4) The 1993 results reflect after tax severance and facilities charges of $200.0 million
    ($308.0 million pretax).  Of the total 1993 charge, $51.9 million ($79.8 million pretax) was
    allocated to Aetna Health Plans, $20.0 million ($30.8 million pretax) to Aetna Life Insurance
    & Annuity, $7.1 million ($11.0 million pretax) to International, $14.2 million ($21.9 million 
    pretax) to Large Case Pensions, $11.2 million ($17.2 million pretax) to Corporate and 
$95.6 million ($147.3 million pretax) to Discontinued Operations.

(5) The 1995 results from Discontinued Operations include a $259.5 million after tax charges for
    asbestos-related claims and a $505.7 million after tax charges for environmental-related
    claims.
</TABLE>


<PAGE> 117

Notes to Financial Statements (Continued)

16.  Financial Instruments

Estimated Fair Value

The carrying values and estimated fair values of the company's 
financial instruments at December 31, 1995 and 1994 were as 
follows:

<TABLE>
<CAPTION>
                                                    Continuing Operations              
                                      _________________________________________________
(Millions)                                      1995                      1994         
                                      _________________________________________________
                                       Carrying     Fair         Carrying     Fair
                                       Value        Value        Value        Value
                                       ________     _____        ________     _____
<S>                                    <C>          <C>          <C>          <C>

Assets:
  Cash and cash equivalents            $ 1,712.7    $ 1,712.7    $ 2,277.2    $ 2,277.2
  Short-term investments                   607.8        607.8        344.4        344.4
  Debt securities                       31,860.3     31,860.3     27,525.4     27,522.2
  Equity securities                        659.7        659.7        614.6        614.6
  Mortgage loans                         8,327.2      8,544.0     10,389.9     10,109.9

Liabilities:
  Investment contract liabilities:
    With a fixed maturity              $ 9,779.6    $ 9,738.2    $11,562.3    $11,555.1
    Without a fixed maturity            12,316.2     12,332.7     11,250.6     10,927.9
  Short-term debt                          389.6        389.6         14.8         14.8
  Long-term debt                           989.1        988.3      1,079.2        973.9

                                                  Discontinued Operations              
                                      _________________________________________________
(Millions)                                      1995                      1994         
                                      _________________________________________________
                                       Carrying     Fair         Carrying     Fair
                                       Value        Value        Value        Value
                                       ________     _____        ________     _____
<S>                                    <C>          <C>          <C>          <C>
Assets:
  Cash and cash equivalents            $ 1,153.6    $ 1,153.6    $   676.4    $   676.4
  Short-term investments                   137.2        137.2        106.0        106.0
  Debt securities                       11,705.6     11,705.6      9,586.1      9,579.7
  Equity securities                        525.5        525.5      1,041.0      1,041.0
  Mortgage loans                         1,061.7      1,052.7      1,453.7      1,416.0 

Liabilities:
  Short-term debt                      $       -    $       -    $     9.1    $     9.1
  Long-term debt                            35.2         35.2         35.5         35.5
</TABLE>

Fair value estimates are made at a specific point in time, based 
on available market information and judgments about the financial 
instrument, such as estimates of timing and amount of expected 
future cash flows.  Such estimates do not reflect any premium or 
discount that could result from offering for sale at one time the 
company's entire holdings of a particular financial instrument, 
nor do they consider the tax impact of the realization of 
unrealized gains or losses.  In many cases, the fair value 
estimates cannot be substantiated by comparison to independent 
markets, nor can the disclosed value be realized in immediate 
settlement of the instrument.  In evaluating the company's 
management of interest rate and liquidity risk, and currency 
exposures, the fair values of all assets and liabilities should be 
taken into consideration, not only those presented above.


<PAGE> 118

Notes to Financial Statements (Continued)

16.  Financial Instruments (continued)

Estimated Fair Value (continued)

The following valuation methods and assumptions were used by the 
company in estimating the fair value of the above financial 
instruments:

Short-term instruments:  Fair values are based on quoted market 
prices or dealer quotations.  Where quoted market prices or dealer 
quotations are not available, the carrying amounts reported in the 
Consolidated Balance Sheets approximate fair value.  Short-term 
instruments have a maturity date of one year or less and include 
cash and cash equivalents, short-term investments and short-term 
debt.

Debt and equity securities:  Fair values are based on quoted 
market prices or dealer quotations.  Where quoted market prices or 
dealer quotations are not available, fair values are estimated by 
using quoted market prices for similar securities or discounted 
cash flow methods.

Mortgage loans:  Fair values are estimated by discounting expected 
mortgage loan cash flows at market rates which reflect the rates 
at which similar loans would be made to similar borrowers.  The 
rates reflect management's assessment of the credit quality and 
the remaining duration of the loans.  The fair value estimates of 
mortgage loans of lower credit quality, including problem and 
restructured loans, are based on the estimated fair value of the 
underlying collateral.

Investment contract liabilities (included in policyholders' funds 
left with the company):
With a fixed maturity:  Fair value is estimated by discounting 
cash flows at interest rates currently being offered by, or 
available to, the company for similar contracts.

Without a fixed maturity:  Fair value is estimated as the amount 
payable to the contractholder upon demand.  However, the company 
has the right under such contracts to delay payment of withdrawals 
which may ultimately result in paying an amount different than 
that determined to be payable on demand.

Long-term debt:  Fair value is based on quoted market prices for 
the same or similar issued debt or, if no quoted market prices are 
available, on the current rates estimated to be available to the 
company for debt of similar terms and remaining maturities.


<PAGE> 119

Notes to Financial Statements (Continued)

16.  Financial Instruments (Continued)

Off-Balance-Sheet Financial Instruments (including Derivative 
Financial Instruments):
                       

The notional amounts, carrying values and estimated fair values of 
the company's off-balance-sheet financial instruments at 
December 31, 1995 and 1994 were as follows:

<TABLE>
<CAPTION>
                                    Continuing Operations           Discontinued Operations   
                                 ___________________________      ___________________________ 
                                            Carrying                        Carrying
                                            Value                           Value
                                 Notional   Asset       Fair      Notional  Asset       Fair
(Millions)                       Amount    (Liability)  Value     Amount   (Liability)  Value
                                 ____________________________     ___________________________
1995
_____________________________________________________________________________________________
<S>                              <C>        <C>         <C>       <C>       <C>         <C> 

Foreign exchange forward 
 contracts - sell:
  Related to net investments in  
   foreign affiliates            $210.4     $ (2.0)     $ (3.5)   $     -   $     -     $   -
  Related to investments in
   nondollar denominated assets    54.0        (.1)        (.1)      65.2       (.1)      (.2) 
Foreign exchange forward 
 contracts - buy:
  Related to net investments in
   foreign affiliates               2.7         .2          .4          -         -         -
  Related to investments in
   nondollar denominated assets    43.8         .1          .6          -         -         -
Interest rate swaps:
  Unrecognized gains               43.0          -         9.5      380.0         -      20.4
  Unrecognized losses                 -          -           -      380.0         -     (20.2)
Futures contracts to sell
  investments                      20.9         .2          .2          -         -         -
Forward swap agreement            100.0          -          .1          -         -         -


</TABLE>
<TABLE>
<CAPTION>
                                     Continuing Operations          Discontinued Operations
                                 ____________________________    ____________________________
                                            Carrying                        Carrying
                                            Value                           Value
                                 Notional   Asset       Fair      Notional  Asset       Fair
(Millions)                       Amount    (Liability)  Value     Amount   (Liability)  Value
                                 ____________________________     ___________________________
1994
_________________________________________________________________________________________________
<S>                              <C>        <C>         <C>       <C>       <C>         <C>

Foreign exchange forward 
  contracts - sell:
  Related to net investments in
   foreign affiliates            $470.7     $ (2.7)     $ (4.9)   $  27.1   $    .2     $  .2
  Related to investments in
   nondollar denominated assets    60.8       (1.0)        (.1)     206.1        .2      (1.5)
Foreign exchange forward 
  contracts - buy:
  Related to net investments in
   foreign affiliates              48.5        5.2         4.8          -         -         -
  Related to investments in
   nondollar denominated assets    37.1         .5          .3        3.8       (.4)      (.1)
Futures contracts to purchase
   investments                    122.5         .1          .1          -         -         -  
Interest rate swaps:
  Unrecognized gains               43.0          -         2.4      386.4         -      18.3
  Unrecognized losses                 -          -           -      386.4         -     (18.3)
</TABLE>

The notional amounts of these instruments do not represent the 
company's risk of loss.  The fair value amounts of these 
instruments was estimated based on quoted market prices, dealer 
quotations or internal price estimates believed to be comparable 
to dealer quotations.  These amounts reflect the estimated amounts 
that the company would have to pay or would receive if the 
contracts were terminated.


<PAGE> 120

Notes to Financial Statements (Continued)

16.  Financial Instruments (Continued)

The company engages in hedging activities to manage foreign 
exchange and interest rate risk.  Such hedging activities have 
principally consisted of using off-balance-sheet instruments 
including foreign exchange forward contracts, futures and forward 
contracts, and interest rate swap agreements.   All of these 
instruments involve, to varying degrees, elements of market risk 
and credit risk in excess of the amounts recognized in the 
Consolidated Balance Sheets.  The company evaluates the risks 
associated with off-balance-sheet financial instruments in a 
manner similar to that used to evaluate the risks associated with 
on-balance-sheet financial instruments.  (Please see General 
Account Investments - Use of Derivatives and Other Investments on 
page 59 of Management's Discussion and Analysis of Financial 
Condition and Results of Operations.)  Market risk is the 
possibility that future changes in market prices may make a 
financial instrument less valuable.  For off-balance-sheet 
financial instruments used for hedging, such market price changes 
are generally offset by the market price changes in the hedged 
instruments held by the company.  Credit risk arises from the 
possibility that counterparties may fail to perform under the 
terms of the contract, which could result in an unhedged position.  
However, unlike on-balance-sheet financial instruments, where 
credit risk generally is represented by the notional or principal 
amount, the off-balance-sheet financial instruments' risk of 
credit loss generally is significantly less than the notional 
value of the instrument and is represented by the positive fair 
value of the instrument.  The company generally does not require 
collateral or other security to support the financial instruments 
discussed below.  However, the company controls its exposure to 
credit risk through credit approvals, credit limits and regular 
monitoring procedures.  There were no material concentrations of 
off-balance-sheet financial instruments at December 31, 1995.

Foreign Exchange Forward Contracts:

Foreign exchange forward contracts are agreements to exchange 
fixed amounts of two different currencies at a specified future 
date and at a specified price.  The company utilizes foreign 
exchange forward contracts to hedge its foreign currency exposure 
arising from certain investments in foreign affiliates (primarily 
Canada and Great Britain) and nondollar denominated investment 
securities. The company generally utilizes foreign currency 
contracts with terms of up to three months.

At December 31, 1995, the company had unhedged foreign currency 
exposures for continuing operations of $555.8 million related to 
net investments in foreign affiliates (primarily Taiwan, Mexico 
and Chile) and $61.6 million related to investments in nondollar 
denominated assets.  These exposures include $317.8 million and 
$8.6 million in net investments in foreign affiliates and 
investments in nondollar denominated assets, respectively, for 
which effective markets for hedging vehicles do not currently 
exist.  The unhedged foreign currency exposures for Discontinued 
Operations were immaterial.


<PAGE> 121

Notes to Financial Statements (Continued)

16.  Financial Instruments (Continued)

Futures Contracts:

Futures contracts represent commitments to either purchase or sell 
securities or money market instruments at a specified future date 
and at a specified price or yield.  Futures contracts trade on 
organized exchanges and, therefore, have minimal credit risk.

Interest Rate Swaps:

The company utilizes interest rate swaps to manage certain 
exposures related to changes in interest rates in Discontinued 
Operations.  This swap activity included transactions which were 
entered into in prior years where the company acts as an 
intermediary for entities whose debt the company has guaranteed to 
allow them to convert variable rate debt to a fixed rate, with the 
company retaining no interest rate risk.  (Please refer to 
Note 2.)  Interest rate swap activity also includes exchanging 
variable rate asset returns for fixed-rate returns.

17.  Commitments and Contingent Liabilities

Commitments

Commitments to extend credit are legally binding agreements to 
lend monies at a specified interest rate and within a specified 
time period.  Risk arises from the potential inability of 
counterparties to perform under the terms of the contracts and 
from interest rate fluctuations.  The company's exposure to credit 
risk is reduced by the existence of conditions within the 
commitment agreements that release the company from its 
obligations in the event of a material adverse change in the 
counterparty's financial condition.  At December 31, 1995 and 
1994, the continuing operations of the company had $21.5 million 
and $19.6 million, respectively, in commitments to fund 
partnerships.  The Discontinued Operations of the company had 
$79.8 million and $120.0 million in commitments to fund 
partnerships at December 31, 1995 and 1994, respectively.

Through the normal course of investment operations, the company 
commits to either purchase or sell securities or money market 
instruments at a specified future date and at a specified price or 
yield.  The inability of counterparties to honor these commitments 
may result in either a higher or lower replacement cost.  Also, 
there is likely to be a change in the value of the securities 
underlying the commitments.  At December 31, 1995, the continuing 
operations of the company had commitments to purchase investments 
for $49.1 million, the fair value of which was $49.2 million.

<PAGE> 122

Notes to Financial Statements (Continued)

17.  Commitments and Contingent Liabilities (Continued)

At December 31, 1995, the Discontinued Operations had commitments 
to purchase investments for $66.9 million, the fair value of which 
was $67.3 million.

The company has agreed with Travelers Group Inc. to invest up to 
$200 million in a potential offering of common stock in a new 
property-casualty entity to be established by Travelers Group Inc.

Leases

The company has entered into operating leases for office space and 
certain computer and other equipment.  Rental expenses for 
continuing operations for these items were $203.0 million, 
$206.4 million and $220.9 million for 1995, 1994 and 1993, 
respectively.  Future net minimum payments under noncancelable 
leases as of December 31, 1995 for continuing operations are 
estimated to be $159.3 million for 1996, $134.4 million for 1997, 
$115.7 million for 1998, $110.9 million for 1999, $95.3 million 
for 2000 and $622.8 million thereafter.

Included in these future payments are $149.9 million and 
$328.5 million, attributable to the next five and subsequent eight 
years, respectively, of a master lease for office space.  
Concurrent with the sale of the Discontinued Operations, Travelers 
will sublease the space currently occupied by the company at 
market rates for a period of eight years.  The company expects to 
record a charge to continuing operations of approximately 
$290.0 million pretax ($190.0 million after tax).  Such charge 
represents the present value of the difference between rent 
required to be paid by the company under the master lease and 
future rentals expected to be received by the company.

Litigation

The company is continuously involved in numerous lawsuits arising, 
for the most part, in the ordinary course of its business 
operations as an insurer.  While the ultimate outcome of such 
litigation cannot be determined at this time, such litigation, net 
of reserves established therefor and giving effect to reinsurance 
probable of recovery, is not expected to result in judgments for 
amounts material to the financial condition of the company, 
although it may adversely affect results of operations in future 
periods.


<PAGE> 123

Independent Auditors' Report

The Shareholders and Board of Directors
Aetna Life and Casualty Company:

We have audited the consolidated balance sheets of Aetna Life and 
Casualty Company and Subsidiaries as of December 31, 1995 and 
1994, and the related consolidated statements of income, 
shareholders' equity, and cash flows for each of the years in the 
three-year period ended December 31, 1995.  These consolidated 
financial statements are the responsibility of the company's 
management.  Our responsibility is to express an opinion on these 
consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted 
auditing standards.  Those standards require that we plan and 
perform the audit to obtain reasonable assurance about whether the 
financial statements are free of material misstatement.  An audit 
includes examining, on a test basis, evidence supporting the 
amounts and disclosures in the financial statements.  An audit 
also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating 
the overall financial statement presentation.  We believe that our 
audits provide a reasonable basis for our opinion.

In our opinion, the aforementioned consolidated financial 
statements present fairly, in all material respects, the financial 
position of Aetna Life and Casualty Company and Subsidiaries at 
December 31, 1995 and 1994, and the results of their operations 
and their cash flows for each of the years in the three-year 
period ended December 31, 1995, in conformity with generally 
accepted accounting principles.

As discussed in Notes 1 and 2 to the consolidated financial 
statements, in 1993 the company changed its methods of accounting 
for certain investments in debt and equity securities, 
postemployment benefits, workers' compensation life table 
indemnity reserves and retrospectively rated reinsurance 
contracts.





/s/ KPMG Peat Marwick LLP
Hartford, Connecticut
February 6, 1996


<PAGE> 124

Quarterly Data (Unaudited)

<TABLE>
<CAPTION>

(Millions, except per share data)         First          Second         Third          Fourth     
__________________________________________________________________________________________________

<S>                                       <C>            <C>            <C>            <C>
1995 (1)(2)                                                                                       
__________________________________________________________________________________________________

Total revenue                             $  3,192.3     $  3,244.2     $  3,191.0     $  3,350.5 
__________________________________________________________________________________________________

Income from continuing
 operations before income taxes           $    143.4     $    181.6     $    176.0     $    225.2
Federal and foreign income taxes                51.0           60.5           63.4           77.4 
                                          ________________________________________________________
  Income from continuing operations       $     92.4     $    121.1     $    112.6     $    147.8 
Income (Loss) from discontinued
 operations, net of tax                         68.4         (418.0)          99.5           27.9 
                                          ________________________________________________________
Net income (loss)                         $    160.8     $   (296.9)    $    212.1     $    175.7 
__________________________________________________________________________________________________
Per Share Results:
Income from continuing operations         $      .82     $     1.07     $      .99     $     1.28
Income (Loss) from discontinued 
 operations, net of tax                          .60          (3.69)           .87            .25 
                                          ________________________________________________________
  Net income (loss)                       $     1.42     $    (2.62)    $     1.86     $     1.53 
__________________________________________________________________________________________________
Common Stock Data:
Dividends Declared                        $      .69     $      .69     $      .69     $      .69
Common Stock Prices, High                      57.00          64.25          74.38          75.88
Common Stock Prices, Low                       46.88          54.50          60.38          67.88 
__________________________________________________________________________________________________
<FN>

(1) Second quarter 1995 net income includes reserve additions of $487.5 million, after tax, 
    related to environmental-related claims.
(2) Fourth quarter 1995 net income includes reserve additions of $218.1 million, after tax, 
    related to asbestos-related claims.
</TABLE>

<TABLE>
<CAPTION>
(Millions, except per share data)         First          Second         Third          Fourth     
__________________________________________________________________________________________________
<S>                                       <C>            <C>            <C>            <C>
1994 (1)(2)(3)                                                                                    
__________________________________________________________________________________________________

Total revenue                             $  2,935.5     $  3,088.4     $  3,099.4     $  3,095.7 
__________________________________________________________________________________________________

Income from continuing
 operations before income taxes           $    119.1     $    169.8     $    157.8     $    180.8
Federal and foreign income taxes                47.2           57.4           54.4           59.1 
                                          ________________________________________________________
Income from continuing operations         $     71.9     $    112.4     $    103.4     $    121.7 
                                                                                                  
Income (Loss) from discontinued 
 operations, net of tax                        (26.2)          20.0           26.0           38.3 
                                          ________________________________________________________
  Net income                              $     45.7     $    132.4     $    129.4     $    160.0 
__________________________________________________________________________________________________
Per Share Results:
Income from continuing operations         $      .64     $     1.00     $      .92     $     1.08
Income (Loss) from discontinued 
 operations, net of tax                         (.24)           .17            .23            .34 
                                          ________________________________________________________
  Net income                              $      .40     $     1.17     $     1.15     $     1.42 
__________________________________________________________________________________________________
Common Stock Data:
Dividends Declared                        $      .69     $      .69     $      .69     $      .69
Common Stock Prices, High                      65.75          57.88          57.50          48.00
Common Stock Prices, Low                       53.13          50.00          45.13          43.25 
__________________________________________________________________________________________________
<FN>

Earnings per share calculations are based on results of stand-alone quarters.

Common stock prices are as reported on the NYSE-Composite Tape.

See Notes to Financial Statements.

(1) The 1994 net income includes net realized capital losses from additions to reserves
    for mortgage loans and real estate and real estate write-downs, after taxes
    and after gains and losses allocated to experience rated pension contractholders,
    of $22.2 million, $19.8 million, $17.9 million and $6.5 million for the first,
    second, third and fourth quarters of 1994, respectively.
(2) First quarter 1994 net income includes catastrophe losses of $123.8 million,
    after tax, related primarily to the Los Angeles earthquake and severe winter weather.
(3) Second quarter 1994 net income includes prior year reserve additions of
    $82.4 million, after tax, primarily related to environmental indemnity claims, offset
    by $53.5 million, after tax, of prior year reserve releases in the personal auto 
    business.

</TABLE>

<PAGE> 125

Appendix to Exhibit 13

The following information, which is included/presented in tabular 
form in this exhibit, is presented in the form of pie charts or a 
graph in the printed 1995 annual report to shareholders of Aetna 
Life and Casualty Company:

<TABLE>

<CAPTION>

Page No. in this Exhibit      Description
________________________      ___________

<S>                           <C>

           8                  1995 Health Membership (1)
           9                  1995 Specialty Health Membership (1)
           9                  1995 Group Insurance Membership (1)
          10                  Participation in Risk versus Nonrisk Health Plans (2)

<FN>

 (1)  1995 membership (included in tabular form with 1994 and 1993 membership) is 
      also presented in the form of a pie chart in the printed 1995 annual report to 
      shareholders of Aetna Life and Casualty Company.

 (2)  Presented in the form of a bar graph in the printed 1995 annual report to 
      shareholders of Aetna Life and Casualty Company.

</TABLE>



59