<PAGE> 1
                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                    FORM 10-K
                   ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
                      OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the fiscal year ended December 31, 1996
                          Commission file number 1-11913

                                    Aetna Inc.
                                    __________
          (Exact name of registrant as specified in its charter)

          Connecticut                              02-0488491        
_______________________________                 _____________________
(State or other jurisdiction of                  (I.R.S. Employer
 incorporation)                                   Identification No.)

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

Registrant's telephone number, including area code:  (860) 273-0123
Securities registered pursuant to Section 12(b) of the Act:

                                            Name of each exchange on
       Title of each class                     which registered      
       ___________________                  _________________________

Common Stock $.01 par value                 New York Stock Exchange

6.25% Class C Voting Mandatorily            New York Stock Exchange
  Convertible Preferred Stock 
  $.01 par value

9 1/2% Cumulative Monthly Income            New York Stock Exchange
  Preferred Securities, Series A
  (issued by a subsidiary)

6 3/8% Notes due August 15, 2003            New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:  None
                                                                     
_____________________________________________________________________

Indicate by check mark whether the registrant (1) has filed all 
reports required to be filed by Section 13 or 15(d) of the 
Securities Exchange Act of 1934 during the preceding 12 months 
(or for such shorter period that the registrant was required to 
file such reports), and (2) has been subject to such filing 
requirements for the past 90 days.
                                            Yes   X     No _____
                                                _____           

Indicate by check mark if disclosure of delinquent filers pursuant 
to Item 405 of Regulation S-K is not contained herein, and will 
not be contained, to the best of registrant's knowledge, in 
definitive proxy or information statements incorporated by 
reference in Part III of this Form 10-K or any amendment to this 
Form 10-K.       [X]

The aggregate market value of the voting stock held by 
nonaffiliates of the registrant as of January 31, 1997 was 
$12,519,793,850.

As of January 31, 1997, 149,772,274 shares of the registrant's 
Common Stock $.01 par value were outstanding.

                    DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's 1996 annual report to shareholders 
(the "Annual Report").  (Parts I, II and IV)

Portions of the registrant's proxy statement to be filed on or about 
March 21, 1997 (the "Proxy Statement").  (Parts III and IV)


<PAGE> 2


                        TABLE OF CONTENTS

                                                                          Page
                                                                          ____

PART I

Item  1.   Business.
           A.  Organization of Business                                      3
           B.  Financial Information about Industry Segments                 4
           C.  Description of Industry Segments
               1.  Aetna U.S. Healthcare                                     4
               2.  Aetna Retirement Services                                14
               3.  International                                            18
               4.  Large Case Pensions                                      20
               5.  General Account Investments                              22
               6.  Other Matters
                   a.  Regulation                                           23
                   b.  NAIC IRIS Ratios                                     26
                   c.  Ratios of Earnings to Fixed Charges and Earnings
                       to Combined Fixed Charges and Preferred Stock
                       Dividends                                            26
                   d.  Trademarks                                           27
                   e.  Miscellaneous                                        27
Item  2.   Properties.                                                      28
Item  3.   Legal Proceedings.                                               28
Item  4.   Submission of Matters to a Vote of Security Holders.             28
Executive Officers of Aetna Inc.                                            29

PART II

Item  5.   Market for Registrant's Common Equity and Related
           Stockholder Matters.                                             31
Item  6.   Selected Financial Data.                                         31
Item  7.   Management's Discussion and Analysis of Financial
           Condition and Results of Operations.                             31
Item  8.   Financial Statements and Supplementary Data.                     31
Item  9.   Changes in and Disagreements with Accountants on
           Accounting and Financial Disclosure.                             31

PART III

Item 10.   Directors and Executive Officers of the Registrant.              32
Item 11.   Executive Compensation.                                          32
Item 12.   Security Ownership of Certain Beneficial Owners and Management.  32
Item 13.   Certain Relationships and Related Transactions.                  32

PART IV

Item 14.   Exhibits, Financial Statement Schedules and Reports
           on Form 8-K.                                                     32
Index to Financial Statement Schedules                                      38
Signatures                                                                  58


<PAGE> 3

PART I

Item 1.  Business.

A.  Organization of Business

Aetna Inc. and its subsidiaries (collectively, the "Company") 
constitute the nation's largest health benefits company, based on 
membership, and one of the nation's largest insurance and 
financial services organizations centered around three core 
businesses:  health care, retirement services and international.

Aetna Inc., a Connecticut corporation, became the parent corporation 
of Aetna Services, Inc. ("Aetna Services") (formerly Aetna Life and 
Casualty Company) and U.S. Healthcare, Inc. ("U.S. Healthcare") as a 
result of the merger transaction on July 19, 1996.  The merger has 
been accounted for as a purchase of U.S. Healthcare.  The Company's 
consolidated results of operations include the results of Aetna 
Services and, from the date of the merger, the results of U.S. 
Healthcare.  (See Note 2 of Notes to Financial Statements in the 
Annual Report.)

On April 2, 1996, the Company sold its property-casualty operations 
("Discontinued Operations") to an affiliate of The Travelers 
Insurance Group Inc. ("Travelers").  (See Note 3 of Notes to 
Financial Statements in the Annual Report.)

The Company's business operations are conducted in the following 
segments:  Aetna U.S. Healthcare, Aetna Retirement Services, 
International and Large Case Pensions.  The principal products 
included in such segments are:

Aetna U.S. Healthcare:
     Health products (including health maintenance organization,
       point-of-service, preferred provider organization and
       indemnity products)
     Group life and disability insurance
     Long-term care insurance

Aetna Retirement Services:
     Financial services
     Individual life insurance

International:
     Life and health insurance and financial services

Large Case Pensions:
     Retirement products (including pension and annuity products) 
       for primarily defined benefit and defined contribution 
       plans

In addition to the above, the Corporate segment includes interest 
expense and corporate expenses not directly related to the 
Company's business segments, such as staff area expenses, 
advertising and contributions.


<PAGE> 4

B.  Financial Information about Industry Segments

Revenue, income from continuing operations before income taxes, income 
from continuing operations, income (loss) from Discontinued 
Operations, net of tax, net income, and assets, by industry segment 
are set forth in Note 17 to the Financial Statements, which is 
incorporated herein by reference to the Annual Report.  Revenue and 
income from continuing operations before extraordinary item and 
cumulative effect adjustments, attributable to each industry segment 
are incorporated herein by reference to the Selected Financial Data in 
the Annual Report.

Certain reclassifications have been made to 1995 and 1994 financial 
information to conform to 1996 presentation.

C.  Description of Industry Segments

1.  Aetna U.S. Healthcare

Products and Services
_____________________

Aetna U.S. Healthcare provides a full spectrum of health products 
(managed care and indemnity) and group insurance products (life, 
disability and long-term care) on both an insured and an employer-
funded basis.  Under insured plans, the Company assumes all or a 
majority of health care cost, utilization, mortality, morbidity or 
other risk depending on the product.  Under employer-funded plans, 
the customer, and not the Company, assumes all or a majority of 
these risks.

Aetna U.S. Healthcare consists of the Health Risk business and the 
Group Insurance and Other Health business.

Health products include health maintenance organization, point-of-
service, preferred provider organization and indemnity products.  
The Health Risk business includes such health products offered on 
an insured basis.

The Group Insurance and Other Health business includes group life 
and disability insurance, long-term care insurance and all health 
products offered on an employer-funded basis.  

The following table summarizes premiums and fees and other income 
for the Health Risk and Group Insurance and Other Health 
businesses:

<TABLE>
<CAPTION>
(Millions)                                          1996           1995          1994  
                                                    ____           ____          ____  
<S>                                                 <C>            <C>           <C>
Health Risk                                         $ 6,749.5      $ 4,960.9     $ 4,577.8
Group Insurance and Other Health                      2,511.6        2,301.1       2,230.9
                                                    _________      _________     _________
    Total Aetna U.S. Healthcare                     $ 9,261.1*     $ 7,262.0     $ 6,808.7
                                                    _________      _________     _________
                                                    _________      _________     _________

U.S. Healthcare Pre Merger (historical amounts)     $ 2,384.7**    $ 3,542.1     $ 2,920.4
                                                    _________      _________     _________
                                                    _________      _________     _________
<FN>
*  Includes U.S. Healthcare premiums and fees and other income from July 19, 1996 through 
   December 31, 1996.
** Reflects premiums and fees and other income from January 1, 1996 through July 18, 1996.
</TABLE>

Under insured plans, Aetna U.S. Healthcare charges a premium and 
under employer-funded plans, Aetna U.S. Healthcare charges a fee 
for administrative and claim services.

<PAGE> 5

The principal Commercial health products offered by Aetna U.S. 
Healthcare include the following:

Health Maintenance Organization ("HMO") plans offer comprehensive 
managed care benefits generally through participating network 
physicians, hospitals and other providers.  When an individual 
enrolls in one of the Company's HMOs, he or she selects a primary 
care physician ("PCP") from among the physicians participating in 
the Aetna U.S. Healthcare network.  PCPs generally are family 
practitioners, internists, general practitioners or pediatricians 
who provide necessary preventive and primary medical care, and are 
generally responsible for coordinating other necessary health care 
including making referrals to participating network specialists.  
Preventive care and quality improvement are emphasized in these 
plans.  The Company offers HMO plans with varying levels of 
copayments which result in different levels of premium rates.  HMO 
plans are principally offered on an insured basis.  HMO membership 
totaled 3.1 million and 2.8 million (on a basis consistent with 
1996 reflecting the inclusion of U.S. Healthcare) as of 
December 31, 1996 and 1995, respectively.

Point-of-Service ("POS") plans blend the advantages of HMO and 
indemnity plans.  Members can have comprehensive HMO-style 
benefits through network providers with minimum out-of-pocket 
expense (copayments) and also can go directly, without a referral, 
to any provider they choose, subject to, among other things, 
certain deductibles and coinsurance, with out-of-pocket maximums.  
POS plans are offered on both insured and employer-funded bases.  
POS membership totaled 3.5 million and 2.6 million (on a basis 
consistent with 1996 reflecting the inclusion of U.S. Healthcare) 
as of December 31, 1996 and 1995, respectively.

Preferred Provider Organization ("PPO") plans offer the member 
flexibility in selecting any health care provider, with benefits 
paid at a higher level when care is received from a network 
provider.  Health care services are typically subject to, among 
other things, deductibles and coinsurance, with member cost 
sharing limited by out-of-pocket maximums.  PPO plans are offered 
on both insured and employer-funded bases.  PPO membership totaled 
3.8 million and 3.9 million (on a basis consistent with 1996 
reflecting the inclusion of U.S. Healthcare) as of December 31, 
1996 and 1995, respectively.

Indemnity plans offer the member flexibility in selecting any 
health care provider for covered services.  Some medical 
management features may be included in these plans, such as 
inpatient precertification, limiting payments to reasonable and 
customary charges and additional benefits for preventive services 
(e.g. cancer screening).  Coverage is subject to deductibles and 
coinsurance, with member cost sharing limited by out-of-pocket 
maximums.  Indemnity plans are offered on both insured and 
employer-funded bases.  Indemnity membership totaled 3.4 million 
and 4.1 million (on a basis consistent with 1996 reflecting the 
inclusion of U.S. Healthcare) as of December 31, 1996 and 1995, 
respectively.


<PAGE> 6

In addition to Commercial health products, the Company also offers 
coverage for Medicare beneficiaries and individuals eligible for 
Medicaid benefits.  Such coverages include the following:

Through contracts with the Health Care Financing Administration 
("HCFA"), Aetna U.S. Healthcare HMOs offer coverage for Medicare-
eligible individuals in certain geographic areas.  All services 
must be obtained through network providers, with the exception of 
emergency and urgent care.  Members generally receive enhanced 
benefits over standard Medicare fee-for-service coverage, 
including vision, hearing and pharmacy coverage.  Such Medicare 
plans are offered primarily on an insured basis.  Medicare 
membership totaled .3 million and .2 million (on a basis 
consistent with 1996 reflecting the inclusion of U.S. Healthcare) 
as of December 31, 1996 and 1995, respectively.

In addition, the Company also serves as an administrator of 
Medicare benefits in certain states, providing claim services for 
physicians, hospitals, skilled nursing facilities and home health 
agencies in exchange for a fee.  During the third quarter of 1996, 
the Company announced its intent to exit this business, in part to 
more actively participate in offering Medicare risk insurance.  
The contract with HCFA to provide these administrative services is 
expected to expire before the end of 1997.

The Company has contracts with certain state and local agencies to 
offer coverage for Medicaid-eligible individuals.  Benefits are 
determined by the contracted agencies.  Medicaid is offered on an 
insured basis.  Medicaid membership totaled .1 million as of 
December 31, 1996 and 1995 (on a basis consistent with 1996 
reflecting the inclusion of U.S. Healthcare).

Aetna U.S. Healthcare offers a variety of specialty health care 
coverages offered as either supplements to health products or as 
stand-alone products.  Such coverages include indemnity and managed 
dental plans, prescription drug, vision, wellness programs, employee 
assistance and behavioral health services, as well as network-based 
workers' compensation case management services.

These specialty health coverages and services are included in either 
Health Risk or Group Insurance and Other Health business, with the 
exception of employee assistance, behavioral health and network-based 
workers' compensation case management services, which are only 
included in Group Insurance and Other Health. 

Aetna U.S. Healthcare group insurance products consist primarily of 
the following: 

Group Life Insurance consists principally of renewable term coverage, 
the amounts of which may be fixed or linked to individual employee 
wage levels.  Basic and supplemental term coverage and spouse and 
dependent coverages are available.  Group universal life and 
accidental death benefit coverages are also available.  Group Life 
Insurance is offered on an insured basis.  Group Life membership 
totaled 8.5 million and 8.0 million as of December 31, 1996 and 1995, 
respectively.


<PAGE> 7

Group Disability Insurance provides coverage for disabled employees' 
income replacement benefits for both short-term disability and long-
term disability.  The Company also offers a managed disability product 
with additional case management features.  Group disability insurance 
coverages are offered on both an insured and employer-funded basis.  
Group disability membership totaled 2.5 million and 2.2 million (on a 
basis consistent with 1996 reflecting the inclusion of U.S. 
Healthcare) as of December 31, 1996 and 1995, respectively.

Long-Term Care Insurance provides coverage for long-term care expenses 
in a nursing home, adult day care or home setting.  Long-term care 
insurance is offered on an insured basis.  Long-term care membership 
totaled .1 million as of December 31, 1996 and 1995 (on a basis 
consistent with 1996 reflecting the inclusion of U.S. Healthcare).

Provider Networks
_________________

General

Aetna U.S. Healthcare provides members with access to health care 
services through networks of independent health care providers.  The 
Company contracts with providers to participate in its provider 
networks as it expands into new geographic areas or as considered 
necessary in order to serve members.  The providers in the Company's 
networks are independent contractors and are neither employees or 
agents of the Company (a small number of provides are employed by 
professional corporations managed by the Company).

The HMOs operated by Aetna U.S. Healthcare most closely adhere to the 
individual practice model.  Under the individual practice model, the 
HMO contracts with independent physicians who are broadly dispersed 
throughout a community and who care for patients in their own offices.  
Participating physicians generally also have patients who are not 
members of the Company's HMOs.  In the Company's HMOs, the primary 
care physician plays an important role in practicing preventive 
medicine and acts on behalf of the HMO member to coordinate the care 
provided by specialist physicians, hospitals, and other health care 
providers.

Aetna U.S. Healthcare employs a variety of practices to help contain 
the cost of medical services.  In addition to contracts with health 
care providers (discussed below), such procedures include the 
development and implementation of standards for the appropriate 
utilization of health care resources and working with health care 
providers to review data in order to help them improve consistency and 
quality.

The Company has developed contractual arrangements with providers to 
help control the cost of medical services.  These contractual 
arrangements cover the majority of medical services.

At December 31, 1996, Aetna U.S. Healthcare provider networks included 
approximately 70,000 primary care physicians, 115,000 specialist 
physicians and 2,500 hospitals.


<PAGE> 8

Contracting

Primary Care Physicians

Compensation by the Company's HMOs to PCPs is principally on a 
capitated basis, although fee-for-service contracts also exist. Under 
a capitation arrangement, physicians receive a monthly fixed fee for 
each HMO member, regardless of the medical services provided to the 
member.  In some instances, the capitation rate is subject to 
adjustment based on the attainment of certain criteria including 
comprehensiveness of care, quality of care and utilization.  This 
quality-based incentive program is administered via the Company's 
Quality Care Compensation System.  In the fee-for-service arrangement, 
network physicians are paid for health care services provided to the 
member based upon an agreed-upon fee schedule.

Hospitals

Aetna U.S. Healthcare negotiates contracts that provide for all-
inclusive per diem, per case and capitated hospitalization rates, 
with fixed rates for ambulatory surgery and emergency room 
services.  Certain contracted hospitals' final compensation is 
based upon attainment of agreed-upon quality and other measures.

Aetna U.S. Healthcare HMOs generally require precertification of 
elective admissions and monitoring of the length of hospital 
stays.  Participating physicians generally admit their HMO 
patients to hospitals using referral procedures that direct the 
hospital to the Company's patient management unit, which confirms 
the patient's membership status while obtaining pertinent data.  
This unit also coordinates related activities, including the 
subsequent transition to the home environment and home care, if 
necessary.  Case management assistance for complex or 
"catastrophic" cases is provided by a special case unit.

Specialists

Specialist physicians participating in the Company's networks are 
generally reimbursed at contracted rates per visit or procedure.

Aetna U.S. Healthcare's HMOs have fixed-fee capitated payment 
arrangements for most mental health, substance abuse, laboratory, 
radiology, diagnostic imaging, podiatric and physical therapy 
services.

Integrated Delivery Systems

Aetna U.S. Healthcare continues to develop strategic relationships 
with national and regional Integrated Delivery Systems ("IDS") to 
provide comprehensive medical services.  Under these arrangements, 
the Company's HMOs contract with an IDS for a fixed, per member 
fee.  This fee covers most of the care required by the member 
which is generally delivered by the IDS and its affiliated PCPs, 
hospitals and specialists.

Quality Assessment

Quality assessment programs begin with the initial selection of 
providers.  Providers wanting to participate in the Company's HMO 
networks must satisfy an extensive set of criteria, including 
licensing, hospital admission privileges, demonstrated 
proficiency, written references, patient access, office standards, 
after-hours coverage and many other factors.


<PAGE> 9

Participating physicians are recertified regularly.  Recertification 
covers many aspects of patient care including an analysis of member 
grievances filed with the member relations department, the transfer 
and termination rate of members from the practice, on-site 
interviews, analysis of utilization patterns, extensive member 
surveys and analysis of drug prescription patterns.  Committees, each 
composed of a peer group of participating private physicians, review 
PCP applicants and participating PCPs being considered for 
recertification.

The Company also offers quality and outcome measurement and 
improvement programs, and health care data analysis systems for 
providers and purchasers of health care.

With an emphasis on quality improvement, the Company seeks 
accreditation for certain of its HMO plans from the National 
Committee for Quality Assurance ("NCQA"), a national organization 
established to review the quality and medical management systems 
of HMOs and other managed care plans.  Accreditation by NCQA is a 
nationally recognized standard.  As of December 31, 1996, a 
majority of the Company's HMO membership is serviced by health 
plans which have been granted full, three-year accreditation.

Principal Markets and Sales
___________________________

The Health Risk business is marketed in all 50 states.  Total 
health membership is widely dispersed throughout the United 
States.  Health Risk membership is concentrated in the Mid-
Atlantic and Northeast regions where the majority of HMO members 
are located.

The Group Insurance and Other Health business is also offered in 
50 states.  This business consists primarily of large customers 
(i.e., those with at least 3,000 lives).

The following table presents total health membership by region and 
funding arrangement, as of December 31, 1996:

<TABLE>
<CAPTION>
(Thousands)                      1996                    1995 (1)                1994 (1)      
                         ______________________  ______________________  ______________________
                         Risk   Nonrisk  Total   Risk   Nonrisk  Total   Risk   Nonrisk  Total 
                         _____  _______  ______  _____  _______  ______  _____  _______  ______
<S>                      <C>    <C>      <C>     <C>    <C>      <C>     <C>    <C>      <C>
Mid-Atlantic             1,921    1,146   3,067    369      767   1,136    384      721   1,105
Northeast                1,170      809   1,979    478      731   1,209    460      706   1,166
Southeast                  609    1,817   2,426    455    1,761   2,216    480    1,738   2,218
Mid-West                   467    2,090   2,557    480    2,072   2,552    468    2,111   2,579
West Central               494    1,919   2,413    508    1,836   2,344    526    1,829   2,355
West(2)                    733    1,035   1,768  1,452    1,044   2,496  1,450      953   2,403
                         _____  _______  ______  _____  _______  ______  _____  _______  ______
 Total Health 
  Membership(3)          5,394    8,816  14,210  3,742    8,211  11,953  3,768    8,058  11,826
                         _____  _______  ______  _____  _______  ______  _____  _______  ______
                         _____  _______  ______  _____  _______  ______  _____  _______  ______
<FN>

(1) Excludes U.S. Healthcare membership of 2,443 and 1,967 for 1995 and 1994, respectively.  
    U.S. Healthcare membership is primarily risk and concentrated in the Mid-Atlantic and 
    Northeast regions.
(2) Decreased membership as of December 31, 1996 resulted primarily from the award of a risk 
    contract with the Civilian Health and Medical Program of the Uniformed Services ("CHAMPUS")
    to another contractor.  The Company remained the primary provider through March 31, 1996.
(3) Includes the following products:  Commercial, Medicare and Medicaid HMO, POS, PPO and 
    Indemnity.
</TABLE>

For membership composition of Aetna U.S. Healthcare's products by 
funding arrangement, see Management's Discussion and Analysis of 
Financial Condition and Results of Operations ("MD&A") - Aetna U.S. 
Healthcare in the Annual Report.


<PAGE> 10

For both Health Risk and Group Insurance and Other Health businesses, 
products and services are marketed primarily to employers for the 
benefit of employees and their dependents.  Frequently, employers offer 
employees a choice of coverages, from which the employee makes his or 
her selection during a designated enrollment period (usually one month 
annually).  In some instances, Aetna U.S. Healthcare may be the only 
health care coverage offered.  Employers pay all or a portion of the 
monthly premiums, and employees, through payroll deductions, pay any 
premium not provided as an employee benefit.

Within the Health Risk business, Medicare coverage is sold on an 
individual basis although certain marketing is directed to retirees of 
employer groups.  Medicaid is marketed to individuals rather than 
employer groups.  Because these coverages are sold on an individual 
basis, Medicare and Medicaid marketing costs are typically higher than 
for other products.

Aetna U.S. Healthcare products are sold primarily through Company sales 
personnel who frequently work with independent consultants and brokers 
who assist in the production and servicing of business.  Sales 
representatives also sell to employers on a direct basis.

For large customers, independent consultants and brokers are frequently 
used to secure sales.

Marketing and sales efforts are supported by an advertising program 
which includes television, radio, billboards and print media, supported 
by market research and direct marketing efforts.

Health Pricing
______________

For insured Commercial plans, customer contracts are generally 
established in advance of the policy period, for a duration of one year.  
In determining the premium rates to be charged to the customer, 
prospective and retrospective rating methodologies are used.

Under prospective rating, a fixed premium rate is determined at the 
beginning of the policy period.  Unanticipated increases in medical 
costs cannot be recovered in the current policy year; however, prior 
experience for a product in the aggregate is considered in determining 
premium rates for future periods.  Federally-qualified HMOs are required 
to set premiums in this manner.

Aetna U.S. Healthcare Commercial HMO plans establish premium rates prior 
to contract inception, without regard to actual utilization of services 
incurred by individual members, using one of three approved community 
rating methods.  These rates may vary from account to account to reflect 
projected family size and contract mix, benefit levels, renewal date, 
and other factors.  Under one of these methods, "traditional community 
rating", an HMO establishes premium rates based on its revenue 
requirements for its entire enrollment in a given community.  Under 
"community rating by class", an HMO establishes premium rates based on 
its revenue requirements for broad classes of membership distinguished 
by factors such as age and sex.  Under "group specific community 
rating", an HMO establishes premium rates based on the HMO's revenue 
requirements for providing services to the group.  State laws in certain 
of the states in which the Company operates HMOs require the filing with 
and approval by the state of HMO premium rates and certain states may 
prohibit the use of one or more of these rating methods.  In addition to 
reviewing anticipated medical costs, some states also review anticipated 
administrative costs as part of the approval process.  Future results of 
the Company could be affected, if the premium rates requested by the 
Company are not approved or are adjusted downward by state regulators.


<PAGE> 11

Under retrospective rating, a preliminary premium rate is 
determined at the beginning of the policy period.  Once the policy 
period has ended, the actual experience is reviewed.  If the 
experience is positive (i.e., actual claim costs and other 
expenses are less than those expected) then a refund is credited 
to the policy.  If the experience is negative, then the resulting 
deficit may, in certain instances, be recovered through 
contractual provisions; otherwise the deficit is considered in 
setting future premium levels.  If a customer elects to terminate 
coverage, these deficits generally cannot be recovered.  
Retrospective rating is generally used for non-HMO health 
customers which exceed 300 lives.

Aetna U.S. Healthcare has contracts with HCFA to provide HMO coverage 
to Medicare beneficiaries who choose health care coverage through an 
HMO.  Under these contracts, which are typically executed annually, 
HCFA pays the HMO at a fixed, capitated rate based on membership and 
adjusted for demographic factors.  At present, the rate is determined 
each year based on average per capita Medicare costs by county, 
calculated on a five-year rolling average.  Inflation, changes in 
utilization patterns and benefit plans, and demographic factors such 
as age and sex are also considered in the rate calculation process.  
Amounts payable under the Medicare risk arrangements are subject to 
periodic unilateral revision by HCFA.  In addition to premiums 
received from HCFA, some of the Medicare products offered by Aetna 
U.S. Healthcare require a modest premium to be paid by the member.  
Under the Medicare risk arrangements, Aetna U.S. Healthcare assumes 
the risk if actual medical expenses exceed the amount paid by HCFA 
and the member.  Medicare contracts typically generate higher per 
member per month revenues and medical expenses than Commercial plans.

Aetna U.S. Healthcare also has HMO contracts with a variety of other 
federal government employee groups under the Federal Employees Health 
Benefit Program.  Premium rates are subject to federal government 
review and, in some instances, audit.  Premium rates for these 
contracts are set prospectively but are subject to retrospective 
adjustments.

Premiums and fees from the federal government accounted for 18% of 
Aetna U.S. Healthcare's revenue in 1996, as determined on a pro forma 
basis for the U.S. Healthcare acquisition (see Note 2 of Notes to 
Financial Statements in the Annual Report).  Contracts with HCFA 
accounted for 70% of these premiums and fees, with the balance from 
other federal employee related benefit programs.

The Company has contracts with state and local agencies to provide 
fully-insured health benefits to persons eligible for Medicaid 
benefits.  These contracts are generally for a period of one to three 
years.  Aetna U.S. Healthcare receives a fixed monthly payment based 
on membership in return for the coverage of health care services.  
Depending on the state, the rates may be subject to unilateral 
revision by the contracting agencies.  Similar to Medicare risk, 
Aetna U.S. Healthcare assumes the risk of higher than expected 
expenses.

Contracts with the customer to provide administrative services for 
employer-funded plans are generally for a period of one to three 
years, with built-in inflation factors.  Aetna U.S. Healthcare may 
also enter into a one-year service arrangement, which guarantees 
certain functions such as customer service response time, claim 
processing accuracy and/or claim processing turnaround time.  A one-
year claim administration arrangement which guarantees claim expenses 
to be incurred by the customer may also be executed.  With any of 
these guarantees, Aetna U.S. Healthcare is financially at risk if the 
conditions of the arrangements are not met.


<PAGE> 12

Competition
___________

Competition in the health care industry has intensified in recent 
years, primarily due to more aggressive marketing and pricing, a 
proliferation of competing products, including new products developed 
in an effort to contain health care costs, and increased quality and 
price sensitivity.  New entrants into the marketplace and existing 
competitors who have been strengthened by mergers and consolidation 
have also contributed to the more intense competitive environment.

Aetna U.S. Healthcare believes that the most significant factors 
which distinguish competing health plans are quality of service 
and managed care programs, comprehensiveness of coverage, cost 
(including both premium and member out-of-pocket costs), product 
design, financial stability and the geographic scope of provider 
networks and the providers available in such networks.  Aetna U.S. 
Healthcare believes that it is competitive in each of these areas.  
The ability to increase the number of persons covered by Aetna 
U.S. Healthcare benefits or to increase revenues is affected by 
competition in any particular area and by the desire and ability 
of employers to self fund their employees' insurance.  Competition 
may also affect the availability of services from health care 
providers, including primary care physicians and hospitals.

Within the Health Risk business, Aetna U.S. Healthcare competes 
with local and regional managed care plans in addition to managed 
care plans sponsored by large health insurance companies and Blue 
Cross/Blue Shield plans.  Additional competitors include other 
types of medical and dental provider organizations, various 
specialty service providers, integrated health care delivery 
organizations, and in certain plans, with programs sponsored by 
the federal or state governments.

Within the Other Health component of the Group Insurance and Other 
Health business, Aetna U.S. Healthcare competes primarily with 
other commercial insurance companies, third party administrators 
and with employers who are moving to totally employer-funded, 
self-administered benefit plans.

For the Group Insurance industry, Aetna U.S. Healthcare believes 
that the most significant factors which distinguish competing 
companies are price, quality of service, comprehensiveness of 
coverage, and product array and design.  Specialty carriers have 
increased market penetration in the disability business.  The 
deeply-penetrated group life market remains highly competitive, 
while competition continues to intensify in the emerging long-term 
care market.

Reserves
________

For the Health Risk business, reserves reflect estimates of the 
ultimate cost of claims that have been incurred but not yet 
reported or paid.  Claim reserves are based on a number of factors 
including those derived from historical claim experience.  
Reserves are recorded for both retrospectively and prospectively 
rated cases.  Medical claims payable are estimated periodically, 
and any resulting adjustments are included in current operations.


<PAGE> 13

For Group Insurance products, reserves are established as premiums 
become due to reflect the present value of expected future 
obligations net of the present value of expected future premiums.  
Policy reserves for group paid-up life insurance generally reflect 
long-term fixed obligations and are computed on the basis of 
assumed or guaranteed yield and benefit payments.  Assumptions are 
based on the Company's historical claim experience.  For long-term 
disability products, reserves are established for (i) lives 
currently in payment status (using standard industry morbidity and 
interest rate assumptions), (ii) lives who have not yet satisfied 
the waiting period, but are expected to do so and (iii) claims 
that have been incurred but not reported.  Long-term care reserves 
are a long-term obligation calculated using industry data for 
morbidity and mortality assumptions.

Group health and group 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.

Reinsurance
___________

Aetna U.S. Healthcare utilizes reinsurance agreements with 
nonaffiliated insurers for Group Insurance businesses to control 
its exposure to large losses and certain other risks.  The Company 
maintains catastrophic life reinsurance which provides protection 
against accidents involving 5 or more covered lives.  For 
disability business, reinsurance arrangements for excess coverage 
are established on a case-by-case basis to reflect the 
circumstances of the specific disability risks.  In addition, the 
Company carries contingent medical malpractice professional 
liability insurance.

Group Life Insurance In Force and Other Statistical Data
________________________________________________________

The following table summarizes changes in group life insurance in 
force before deductions for reinsurance ceded to other companies 
for the years indicated:

<TABLE>
<CAPTION>
(Millions)                                1996        1995        1994     
                                          ____        ____        ____     
<S>                                       <C>         <C>         <C>      
In force, end of year                     $278,499    $274,429    $288,546 
                                          ________    ________    ________ 
                                          ________    ________    ________ 
Terminations (lapses and all other)       $ 18,014    $ 14,119    $ 24,946 
                                          ________    ________    ________ 
                                          ________    ________    ________ 
Number of policies and contracts
 in force, end of year:
    Group Life Contracts (1)                15,288      19,175      23,268 
    Group Conversion Policies (2)           33,538      33,358      37,513 
<FN>

(1) Due to the diversity of coverages and size of covered groups, statistics
    are not provided for average size of policies in force.

(2) Reflects conversion privileges exercised by insureds under group life 
    policies to replace those policies with individual life policies.
</TABLE>

Factors Affecting Forward-Looking Information
_____________________________________________

For information regarding certain important factors that may 
materially affect Aetna U.S. Healthcare's business, see MD&A - 
Forward-Looking Information in the Annual Report.
                                                 


<PAGE> 14

2.  Aetna Retirement Services

Products and Services
_____________________

Aetna Retirement Services ("ARS") offers financial services and 
individual life insurance products.  Primarily all products, other 
than investment advisory services, are offered through Aetna Life 
Insurance and Annuity Company, an indirect, wholly-owned 
subsidiary of the Company.  Investment advisory services are 
offered through Aeltus Investment Management Inc. ("Aeltus"), a 
registered investment adviser and an indirect, wholly-owned 
subsidiary of the Company.  Aeltus also serves as sub-adviser to 
Aetna mutual funds.

Financial Services

Financial services products principally include annuity contracts 
that offer a variety of funding and payout options for individual 
and employer-sponsored retirement plans qualified under Internal 
Revenue Code Sections 401, 403, 408 and 457 (collectively, 
"qualified plans") and nonqualified annuity contracts.  These 
contracts may be deferred or immediate ("payout annuities").  
Financial services also include investment advisory services, 
financial planning and pension plan administrative services.

Individual Life Insurance

Individual life insurance products include universal life and 
variable universal life, which have both life insurance and 
investment characteristics, traditional whole life and term 
insurance.  Universal life and variable universal life products 
accounted for approximately 95% of life insurance new business 
premiums in 1996.

Investment Options

ARS products provide customers with variable and/or fixed 
investment options.  Variable ("nonguaranteed") options provide 
for full assumption by the customer of investment risks.  Assets 
supporting variable options are held in separate accounts that 
invest in Aetna mutual funds and/or unaffiliated mutual funds.  
Separate account investment income and realized capital gains and 
losses are not reflected in the Company's consolidated results of 
operations.  Fixed options can be either "fully guaranteed" or 
"experience rated".  Fully guaranteed options provide guarantees 
on investment return, maturity values, and if applicable, benefit 
payments.  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 (as long as minimum 
guarantees are not triggered) does not impact the Company's 
results.


<PAGE> 15

Fees and Investment Margins

Insurance charges, investment management or other fees earned by 
ARS, vary by product and depend, among other factors, on the 
funding option selected by the customer under the product. For 
variable annuities or life insurance products where assets are 
allocated to variable funding options, ARS charges the separate 
account an asset-based insurance fee and expense charge.  In 
addition, where the customer selects an Aetna mutual fund as a 
variable funding option, ARS receives an asset-based investment 
management fee.  For unaffiliated mutual funds, ARS receives 
distribution fees and/or expense reimbursements.  For fixed 
funding options, ARS derives an investment margin, which is based 
on the difference between income earned on the investments 
supporting the liability and interest credited to customers. Other 
fees or charges, such as administrative fees, may be assessed 
depending on the nature of the product. 

ARS also provides direct investment advisory services to 
unaffiliated customers through Aeltus generally for fees based on 
assets under management.

Assets Under Management

The substantial portion of fees or other charges and investment 
margins are based on assets under management.  Assets under 
management are principally affected by deposits, investment growth 
(i.e., interest credited to customer accounts for fixed options or 
market performance for variable options) and persistency (i.e., 
customer retention).  Assets under management, excluding net 
unrealized capital gains and losses on debt securities other than 
those held in separate accounts, were $32.1 billion, $25.1 billion 
and $20.3 billion at December 31, 1996, 1995 and 1994, 
respectively.  Approximately 93% and 91% of assets under 
management at December 31, 1996 and 1995, respectively, allowed 
for contractholder withdrawal, 75% and 69% of which, respectively, 
are subject to market value adjustments or deferred surrender 
charges at December 31, 1996.

To encourage customer retention, contracts typically impose a 
surrender charge on policyholder balances withdrawn within a 
period of time after the contract's inception.  The period of time 
and level of the charge vary by product.  In addition, an approach 
incorporated into recent variable annuity contracts with fixed 
funding options allows contractholders to receive an incremental 
interest rate if withdrawals from the fixed account are spread 
over a period of five years.  Further, more favorable credited 
rates may be offered after policies have been in force for a 
period of time.  Existing tax penalties on annuity distributions 
prior to age 59-1/2 provide further disincentive to customers for 
premature surrenders of annuity balances, but generally do not 
impede transfers of those balances to products of competitors.


<PAGE> 16

Life Insurance In Force and Other Statistical Data
__________________________________________________

For individual life insurance products, life insurance in force is 
a key determinant of earnings as contract charges for cost of 
insurance coverage are typically based on amounts of coverage in 
force less accumulated policy reserves.  The key drivers of life 
insurance in force are new sales, surrenders and mortality.  The 
following table summarizes changes in life insurance in force 
before deductions for reinsurance ceded to other companies:

<TABLE>
<CAPTION>
(Amounts in millions, except number of policies and average size of policies in 
force)

                                1996         1995         1994    
                                ____         ____         ____    
<S>                             <C>          <C>          <C>     
Sales and additions:
  Permanent:
    Nonparticipating            $  4,357     $  5,212     $  3,348
    Participating                     12           12           13
  Term:
    Nonparticipating               1,382        2,160        1,037
    Participating                    133          390        1,787
                                ________     ________     ________
     Total                      $  5,884     $  7,774     $  6,185
                                ________     ________     ________
                                ________     ________     ________

Terminations:
  Surrenders and conversions    $  1,646     $  1,620     $  1,494
  Lapses                           2,098        1,874        1,973
  Other                              330          281          306
                                ________     ________     ________
     Total                      $  4,074     $  3,775     $  3,773
                                ________     ________     ________
                                ________     ________     ________

In force, end of year:
  Permanent                     $ 35,883     $ 34,614     $ 31,879
  Term                            13,100       12,559       11,295
                                ________     ________     ________
     Total                      $ 48,983     $ 47,173     $ 43,174
                                ________     ________     ________
                                ________     ________     ________

Number of policies in force,
 end of year:
  Nonparticipating               627,233      626,880      627,018
  Participating                  105,098      113,045      120,967
                                ________     ________     ________
     Total                       732,331      739,925      747,985
                                ________     ________     ________
                                ________     ________     ________

Average size of policies in
 force, end of year:
  Nonparticipating              $ 66,385     $ 62,009     $ 54,452
  Participating                   69,883       73,433       74,658
</TABLE>

See Note 12 of Notes to Financial Statements in the Annual Report 
for a discussion of participating life insurance contracts.

The following table summarizes premiums and deposits for ARS:

<TABLE>
<CAPTION>
(Millions)                      1996         1995         1994     
                                ____         ____         ____     
<S>                             <C>          <C>          <C>      
Premiums                        $   180.7    $   260.2    $   235.7
Deposits                          4,564.8      3,785.1      2,966.3
                                _________    _________    _________
                                $ 4,745.5    $ 4,045.3    $ 3,202.0
                                _________    _________    _________
                                _________    _________    _________
</TABLE>

Principal Markets and Method of Distribution
____________________________________________

ARS products and services 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.  ARS products 
generally are sold through pension professionals, independent 
agents and brokers, third party administrators, banks and 
dedicated career agents.


<PAGE> 17

Competition
___________

ARS competes with other insurance companies, as well as an array 
of financial services companies including banks, mutual funds and 
other investment managers.  Principal competitive factors are 
reputation for investment performance, product features, service, 
cost and the perceived financial strength of the investment 
manager or sponsor.

Competition may affect, among other matters, both business growth 
and the pricing of ARS' products and services.

Reserves
________

Reserves for limited payment contracts (annuities with life 
contingent payout) are computed on the basis of assumed investment 
yield, mortality, morbidity and expenses and include a margin for 
adverse deviation.  The assumptions vary by plan, year of issue 
and policy duration.  Reserves for investment contracts (deferred 
annuities and immediate annuities without life contingent payouts) 
are equal to cumulative deposits plus credited interest less 
withdrawals and charges thereon.  Of those investment contracts 
which are experience rated, the reserves also reflect net realized 
capital gains/losses (which ARS reflects through credited rates on 
an amortized basis) and unrealized capital gains/losses related to 
Financial Accounting Standard ("FAS") No. 115.

Reserves for universal life products (which are all experience 
rated) are equal to cumulative deposits less withdrawals and 
charges plus credited interest thereon, plus/less net realized 
capital gains/losses (which ARS reflects through credited rates on 
an amortized basis).  These reserves also reflect unrealized 
capital gains/losses related to FAS No. 115.  Reserves for all 
other fixed individual life contracts are computed on a basis 
consistent with that described above for limited payment 
contracts.

Reserves, as described above, are computed amounts that, with 
additions from premiums and deposits to be received, and with 
interest on such reserves compounded annually at assumed rates, 
are expected to be sufficient to meet the Company's policy 
obligations at their maturities or to pay expected death or 
retirement benefits or other withdrawal requests.

Reinsurance
___________

ARS retains no more than $10 million of risk per individual life 
insured.  Amounts in excess of the retention limit are reinsured 
with unaffiliated companies.

Factors Affecting Forward-Looking Information
_____________________________________________

For information regarding certain important factors that may 
materially affect ARS' business, see MD&A - Forward-Looking 
Information in the Annual Report.


<PAGE> 18

3.  International

The International segment ("International"), through subsidiaries 
and joint venture operations, sells primarily life and health 
insurance and financial services products in non-U.S. markets.

The Company increased its focus on investments in international 
operations in the late 1980's.  Since then the Company has been 
increasing its investments in emerging international and financial 
services markets, primarily in Asia Pacific and Latin America, 
where it believes demographic and other characteristics afford the 
opportunity for long-term business growth.  The Company seeks to 
enter new emerging markets in their early stages of development, 
seeking to be among the first foreign entrants, and then to build 
sufficient scale of operations to compete with local and other 
foreign companies.  The Company also explores opportunities for 
additional investments in markets where it has established 
operations.

The Company may invest in a new market or increase its position in 
a market through a combination of acquisitions, joint ventures or 
by starting up new independent operations.  Over the past 5 years, 
the Company has invested $495 million in its international 
operations, of which $214 million was invested in 1996, a majority 
of which related to expanding its Mexican operations.  
Additionally, in February 1997, the Company entered into an 
agreement in principle to acquire up to 49% of a joint venture in 
Brazil (see MD&A - International in the Annual Report for 
information regarding the 1996 investment in Mexico and the 1997 
agreement in principle to invest in Brazil).

The Company classifies its operations in international regions as 
either "established" or "start-up", depending on the stage of 
their business developments.  Over the past several years, the 
Company has also exited certain mature markets that do not meet 
its current strategy.

International conducts its business in several geographic regions:

         Asia Pacific - Operations are conducted through majority-
         owned subsidiaries in Taiwan and Malaysia, as well as 
         through other equity subsidiaries (where the Company has 
         between a 20% and 50% interest) in Hong Kong and New 
         Zealand.  The products and services sold by these 
         subsidiaries include individual and group life and health 
         insurance, deposit administration and related financial 
         products and services.

         Latin America - Operations are conducted through wholly-
         owned and majority-owned subsidiaries in Chile and equity 
         subsidiaries in Mexico.  The products and services sold 
         by these subsidiaries include individual and group life 
         and health insurance, annuities, personal and commercial 
         property-casualty insurance, and pension fund 
         administration services.

         Canada - Operations are conducted through wholly-owned 
         subsidiaries.  The products and services sold by these 
         subsidiaries include individual and group life, health 
         and disability insurance and administration services to 
         group plans.


<PAGE> 19

         Other - Operations include primarily start-up operations 
         (subsidiaries in the initial years of operation) in Peru, 
         Argentina, Philippines and Indonesia, as well as home 
         office expenses.  The products and services sold by these 
         subsidiaries include individual and group life insurance, 
         and health and pension fund administration services.

Each of the subsidiaries through which International conducts 
business operates within guidelines established by the Company.  
Methods of distributing products vary by country and product 
depending on local laws, customs and the needs of the particular 
market.  Distribution channels include career agents, independent 
agents and brokers, financial institutions and direct sales.  
Competition varies by country and includes well established local 
companies, as well as companies based in North America, Europe, 
Australia and Japan that have a strong international presence.

The following table sets forth International's revenue (including 
only its share of operating income for equity subsidiaries and 
excluding net realized capital gains and losses, and operating 
earnings or losses (i.e., net income or loss excluding net 
realized capital gains and losses) by region, premiums and life 
insurance in force, before deductions for reinsurance ceded to 
other companies:

<TABLE>
<CAPTION>
                                                                       Operating
                                        Revenue                         Earnings
                             ______________________________    ___________________________
(Millions)                   1996       1995       1994        1996      1995      1994   
                             ____       ____       ____        ____      ____      _______
<S>                          <C>        <C>        <C>         <C>       <C>       <C>    
Asia Pacific                 $  845.1   $  698.2   $  636.8    $  54.3   $  46.0   $  31.3
Latin America                   351.5      355.2      261.6       55.8      47.9      35.8
Canada                          375.9      386.5      366.4       10.2      11.2      10.5
Other                            52.0       22.3       27.7      (14.8)    (16.4)     (8.5)
                             ________   ________   ________    _______   _______   _______ 
                             $1,624.5   $1,462.2   $1,292.5    $ 105.5   $  88.7   $  69.1
                             ________   ________   ________    _______   _______   _______
                             ________   ________   ________    _______   _______   _______

Premiums (included in
  revenue above)             $1,166.1   $1,038.5   $  887.1
                             ________   ________   ________
                             ________   ________   ________

Life insurance in force,
  end of year                $ 76,672   $ 59,384   $ 45,126
                             ________   ________   ________
                             ________   ________   ________
</TABLE>

Premium growth in 1996 and 1995 was primarily due to increased 
sales in the Asia Pacific market.

Factors Affecting Forward-Looking Information
_____________________________________________

For information regarding certain important factors that may 
materially affect International's business, see MD&A - Forward-
Looking Information in the Annual Report.


<PAGE> 20

4. Large Case Pensions

Principal Products
__________________

The Large Case Pensions segment manages a variety of retirement 
products (including pension and annuity products) offered to IRC 
Section 401 qualified defined benefit and defined contribution plans.  
Contracts provide nonguaranteed, partially guaranteed (experience 
rated) and fully guaranteed investment options through General and 
Separate Account products.  The majority of Large Case Pensions' 
products that utilize Separate Accounts provide contractholders with 
a vehicle for investments under which the contractholders assume the 
investment risks as well as the benefit of favorable performance.  
Large Case Pensions earns a management fee on these Separate 
Accounts.

In 1993, the Company discontinued its fully guaranteed large case 
pension products.  (For additional information, see MD&A - Large Case 
Pensions in the Annual Report.)

At December 31, assets under management, including Separate Accounts 
and excluding net unrealized capital gains and losses on debt 
securities, were $35.3 billion in 1996, $45.6 billion in 1995 and 
$46.9 billion in 1994.  The decline in assets under management is 
primarily attributable to the sale of Insurance Company Investment 
Management, a specialized asset manager, the transfer of assets under 
management to the ARS segment, reflecting the consolidation of the 
Company's investment advisory services, as well as the continuing 
runoff of the underlying liabilities.

The following table summarizes premiums and deposits:

<TABLE>
<CAPTION>
(Millions)                   1996          1995          1994      
                             ____          ____          ____      
<S>                          <C>           <C>           <C>       
Premiums                     $   176.8     $   264.9     $   234.4 
Deposits                       1,781.8       1,600.2       1,982.2 
                             _________     _________     _________ 
  Total                      $ 1,958.6     $ 1,865.1     $ 2,216.6 
                             _________     _________     _________ 
                             _________     _________     _________ 

</TABLE>

Reserves
________

When the Company discontinued the fully guaranteed large case 
pension products, it established a reserve for expected future 
losses on the runoff of the business.  For additional information 
on this reserve, see Note 9 of Notes to Financial Statements in 
the Annual Report.

The Company also maintains reserves for guaranteed investment 
contracts equal to amounts deposited plus credited interest thereon.  
Reserves for single premium annuity contracts reflect the present 
value of benefits based on actuarial assumptions established at the 
time of contract purchase.  Such assumptions are based on the 
Company's experience, which is periodically reviewed against 
published industry data.  These  products provide guarantees on 
investment return, maturity values, and if applicable, benefit 
payments.  The interest credited on these contracts during 1996 
ranged from 3.5% to 17.7% with an average rate of 8.7% (compared with 
8.9% in 1995).  For the contracts in force at December 31, 1996, the 
average credited rate was 8.5%.  None of these contracts allow for 
contractholder withdrawal, except in extraordinary circumstances.


<PAGE> 21

Reserves for experience rated contracts reflect cumulative deposits, 
less withdrawals and charges, plus credited interest thereon, 
plus/less net realized capital gains/losses (which the Company 
intends to reflect in credited rates) and net unrealized capital 
gains/losses related to FAS No. 115.

Factors Affecting Forward-Looking Information
_____________________________________________

For information regarding certain important factors that may 
materially affect Large Case Pension's business, see MD&A - Forward-
Looking Information in the Annual Report.


<PAGE> 22

5. General Account Investments

Consistent with the nature of the contract obligations involved in 
the Company's health, life, annuity and pension operations, the 
majority of general account assets have been invested in 
intermediate and long-term, fixed-income obligations such as 
treasury obligations, mortgage-backed securities, corporate debt 
securities and mortgage loans.

For information concerning the valuation of investments, see Notes 
1, 4, and 7 of Notes to Financial Statements in the Annual Report.

The following table sets forth the distribution of invested 
assets, cash and cash equivalents and accrued investment income of 
the Company's general account portfolio (excluding Discontinued 
Operations) as of the end of the years indicated:  (1) (2) (3)

<TABLE>
<CAPTION>
(Millions)                                 1996         1995       1994       
                                           ____         ____       ____       
<S>                                        <C>          <C>        <C>        
Debt securities:
  Bonds:
    United States Government and
      government agencies and
      authorities                          $ 3,773.1    $ 3,720.5  $ 4,414.9  
    States, municipalities and
      political subdivisions                   355.3         81.5      113.8  
    U.S. Corporate securities:  
      Utilities                              2,420.3      2,333.0    1,942.5  
      Financial                              4,546.5      4,704.3    3,732.7  
      Transportation/capital goods           2,492.8      2,729.9    2,234.4  
      Health care/consumer products          1,803.7      1,924.8    1,143.7  
      Natural resources                      1,317.9      1,278.8      993.1  
      Other                                  1,519.8      1,859.2    1,484.6  
                                           _________    _________  _________
        Total U.S. Corporate securities     14,101.0     14,830.0   11,531.0  
    Foreign:
      Government, including political
       subdivisions                          2,505.4      1,968.3    1,750.8  
      Utilities                                790.2        780.1      544.1  
      Other                                  3,513.1      2,986.3    2,418.2  
                                           _________    _________  _________  
        Total foreign securities             6,808.7      5,734.7    4,713.1  
    Residential mortgage-backed securities:
      Pass-throughs                          1,848.4      1,864.4    1,902.7  
      Collateralized mortgage obligations    2,764.7      3,073.9    3,091.2  
                                           _________    _________  _________  
        Total residential mortgage-backed
          securities                         4,613.1      4,938.3    4,993.9  
    Commercial/Multifamily mortgage-
      backed securities                      1,144.3        774.0      413.9  
    Other asset-backed securities            1,464.6      1,772.5    1,334.4  
                                           _________    _________  _________
        Total bonds                         32,260.1     31,851.5   27,515.0  
  Redeemable preferred stocks                   76.2          8.8       10.4  
                                           _________    _________  _________  
        Total debt securities               32,336.3     31,860.3   27,525.4  
                                           _________    _________  _________  

Equity securities:
  Common stocks                              1,185.3        566.9      512.7  
  Nonredeemable preferred stocks               147.5         92.8      101.9  
                                           _________    _________  _________  
        Total equity securities              1,332.8        659.7      614.6  
                                           _________    _________  _________  

Short-term investments                         723.2        607.8      344.4  
Mortgage loans                               6,700.9      8,327.2   10,389.9  
Real estate (4)                                850.2      1,277.3    1,283.7  
Policy loans                                   707.3        629.4      533.8  
Other                                          835.5        688.6      838.0  
                                           _________    _________  _________  
        Total investments                  $43,486.2    $44,050.3  $41,529.8  
                                           _________    _________  _________  
                                           _________    _________  _________  

Cash and cash equivalents                  $ 1,462.6    $ 1,712.7  $ 2,277.2  
                                           _________    _________  _________  
                                           _________    _________  _________  

Accrued investment income                  $   598.6    $   618.3  $   596.8  
                                           _________    _________  _________  
                                           _________    _________  _________  
<FN>
(1) Excludes Separate Accounts.
(2) All debt securities are carried at fair value in 1996 and 1995, and a majority are 
    carried at fair value in 1994.
(3) Includes $8.7 billion, $10.3 billion and $11.9 billion of investments supporting 
    discontinued products in 1996, 1995 and 1994, respectively.
(4) Includes real estate acquired through foreclosures (including in-substance
    foreclosures) of mortgage loans.
</TABLE>

<PAGE> 23

The following table summarizes the Company's investment results:  (1)

<TABLE>
<CAPTION>
(Dollar amounts in millions)
                        Net              Earned Net        Net Realized     Change in Net
                     Investment          Investment        Capital Gains    Unrealized Capital
                     Income (2)        Income Rate (3)     (Losses) (4)     Gains and Losses (5)
                     __________        _______________     _____________    ____________________
<S>                  <C>               <C>                 <C>              <C>
For the year:
1996                 $3,565.2           8.0%               $  134.4         $    10.8
1995                  3,575.1           7.9                    47.2           1,002.8
1994                  3,631.4           7.8                   (55.2)           (979.3)

<FN>

(1) Excludes Separate Accounts, investments in affiliates and Discontinued Operations.
(2) Net investment income excludes net realized capital gains and losses and is after 
    deduction of investment expenses, but before deduction of income taxes.
(3) The Earned Net Investment Income Rate for any given year is equal to (a) net investment
    income divided by (b) the average of cash, invested assets and investment income due and
    accrued at the beginning and end of the year.  Investments in affiliates have been 
    eliminated for purposes of this calculation.
(4) Net realized capital gains (losses) are before income taxes and exclude gains and losses 
    allocable to experience rated pension contractholders in all years.  Further, net realized
    capital gains (losses) related to discontinued products were credited to/charged against 
    the reserve for anticipated future losses which was established at the end of 1993.
(5) Net unrealized capital gains (losses) are before federal income taxes and exclude changes
    in unrealized capital gains (losses) related to experience rated contractholders and 
    discontinued products.
</TABLE>

6.  Other Matters

a.  Regulation

General

The Company's operations are subject to comprehensive regulation 
throughout the United States and the foreign jurisdictions in 
which it does business.  The laws of these jurisdictions establish 
supervisory agencies, including state health, insurance and 
securities departments, with broad authority to grant licenses to 
transact business and regulate many aspects of the products and 
services offered by the Company, as well as solvency and reserve 
adequacy.  Many agencies also regulate investment activities on 
the basis of quality, diversification, and other quantitative 
criteria.  The Company's operations and accounts are subject to 
examination at regular intervals by certain of these regulators.

Health Care

The federal government and the states in which the Company 
conducts its HMO and other health operations have adopted laws and 
regulations that govern the business activities of the Company to 
varying degrees.  These laws and regulations may restrict how the 
Company conducts its businesses and may result in additional 
burdens and costs to the Company.  Areas of governmental 
regulation include licensure, premium rates, benefits, service 
area expansion, quality assurance procedures, plan design, 
eligibility requirements, provider contracts and rates of payment, 
underwriting, financial arrangements, financial condition 
(including reserves) and corporate governance.  These laws and 
regulations are subject to amendments and changing interpretations 
in each jurisdiction.


<PAGE> 24

Most states, including those in which the Company now operates 
HMOs, require HMOs to be licensed prior to commencing operations.  
If the Company establishes an HMO in any state where it does not 
presently operate an HMO, it generally has to seek licensure.  The 
time necessary to obtain an HMO license varies from state to 
state.  Each HMO must file periodic financial and operating 
reports with the states in which it does business.  In addition, 
HMO operations are subject to state examination and periodic 
license renewal.

The provision of services to certain employee health benefit plans 
is subject to the Employee Retirement Income Security Act of 1974 
("ERISA"), a complex set of laws and regulations subject to 
interpretation and enforcement by the Internal Revenue Service and 
the Department of Labor ("DOL").  ERISA regulates certain aspects 
of the relationships between the Company and employers who 
maintain employee benefit plans subject to ERISA.  Some of the 
administrative services and other activities of the Company may 
also be subject to regulation under ERISA.  In addition, some 
states require licensure or registration of companies providing 
third party claims administration services for benefit plans.

Certain legislative and regulatory changes related to health 
products have recently been enacted or proposed, and a variety of 
other potential legislative and regulatory changes are receiving a 
high level of attention at both the state and federal level.  For 
a discussion of these matters see MD&A - Regulatory Environment in 
the Annual Report.  For information regarding regulation of 
pricing by the Company's HMOs, see "Aetna U.S. Healthcare - Health 
Pricing", on page 10.

Investment and Retirement Products and Services

Operations conducted by ARS and Large Case Pensions are subject to 
regulation by various insurance agencies where the Company 
conducts business, in particular the insurance departments of 
Connecticut and New York.  Among other matters, these agencies may 
regulate premium rates, trade practices, agent licensing, policy 
forms, underwriting and claims practices, the maximum interest 
rates that can be charged on life insurance policy loans, and the 
minimum rates that must be provided for accumulation of surrender 
value.

The Securities and Exchange Commission (the "SEC") and, to a 
lesser extent, the states regulate the sales and investment 
management activities and operations of broker-dealer and 
investment advisory subsidiaries of the Company.  The SEC also 
regulates certain of the Company's pension, annuity, life 
insurance and other investment and retirement products.  These 
products involve Separate Accounts of Aetna Life Insurance and 
Annuity Company and mutual funds registered under the Investment 
Company Act of 1940.


<PAGE> 25

International

The nature and extent of regulations affecting the Company's 
international operations varies by jurisdiction and line of 
business.  Most operations are subject to local insurance laws.  
These laws typically regulate the types of business that can be 
written, policy forms and terms, currency, permitted investments, 
reserves, taxation and other matters affecting the conduct of the 
business.  International operations are also subject to a variety 
of additional investment and other controls that may be imposed by 
governments.  Certain jurisdictions may require that portions of 
the business be reinsured through designated state-affiliated 
institutions.  As a foreign investor, the Company is also subject 
to a variety of restrictions regarding permitted levels of equity 
ownership, remittance of foreign earnings, repatriation of 
capital, exchange of currency, and entry into new lines of 
business.  Regulation of international operations may also be 
subject to other political factors not typically associated with 
doing business in the United States, such as more rapid change of 
regulatory policy, possible nationalization of businesses, 
hostilities and unrest.

Federal Employee Benefit Regulation

ARS and Large Case Pensions also provide a variety of products and 
services to employee benefit plans that are covered by 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 a portion of a group pension contract issued to 
the plan that was not a "guaranteed benefit contract" 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 DOL interpretive 
bulletin that had suggested that insurance company general account 
assets were not plan assets.

Congress recently enacted the Small Business Job Protection Act 
(the "Act"), which, among other matters, created a framework for 
resolving potential issues raised by the Supreme Court decision.  
The Act provides that, absent criminal conduct, insurers generally 
will not have liability with respect to general account assets 
held under contracts that are not guaranteed benefit contracts 
based on claims that those assets are plan assets.  The relief 
afforded extends to conduct that occurred before the date that is 
eighteen months after the DOL issues final regulations required by 
the Act.  The regulations will address ERISA's application to the 
general account assets of insurers attributable to contracts 
issued on or before December 31, 1998 that are not guaranteed 
benefit contracts.  The conference report relating to the Act 
states that contracts issued after December 31, 1998 that are not 
guaranteed benefit contracts will be subject to ERISA's fiduciary 
obligations.  The Company is not currently able to predict how 
these matters may ultimately affect its businesses.



<PAGE> 26

HMO and Insurance Holding Company Laws

A number of states, including Connecticut, regulate affiliated 
groups of HMOs and insurers such as the Company under holding 
company statutes.  These laws may require these companies to 
maintain certain levels of equity.  For information regarding 
restrictions on certain payments of dividends or other 
distributions by HMO and insurance company subsidiaries of the 
Company, see MD&A - Liquidity and Capital Resources in the Annual 
Report.  Some of these laws also regulate changes in control (as 
do Connecticut corporate laws), and other matters such as 
transactions with affiliates.  See also Note 16 of Notes to 
Financial Statements in the Annual Report.

Insurance Company Guaranty Fund Assessments

Under insurance guaranty fund laws existing in all states, 
insurers doing business in those states can be assessed (up to 
prescribed limits) for certain obligations of insolvent insurance 
companies to policyholders and claimants.  The after-tax charges 
to earnings for guaranty fund obligations for the years ended 
December 31, 1996 and 1995 were $4 million and $8 million, 
respectively.  There were no such charges in 1994.  While the 
Company has historically recovered more than half of guaranty fund 
assessments through statutorily permitted premium tax offsets, 
significant increases in assessments could jeopardize future 
efforts to recover such assessments.  For information regarding 
certain other potential regulatory changes relating to the 
Company's businesses, see MD&A - Forward-Looking Information.

b.  NAIC IRIS Ratios

The NAIC IRIS ratios cover 12 categories of financial data with 
defined usual ranges for each category.  The ratios are intended 
to provide insurance regulators "early warnings" as to when a 
given company might warrant special attention.  An insurance 
company may fall out of the usual range for one or more ratios and 
such variances may result from specific transactions that are in 
themselves immaterial or eliminated at the consolidated level.  In 
1995, none of Aetna Inc.'s significant insurance subsidiaries had 
more than two IRIS ratios that were outside of the NAIC usual 
ranges.

Management does not expect that any of the Company's significant 
subsidiaries will have more than two IRIS ratios outside of the 
NAIC usual ranges for 1996.

See MD&A - Liquidity and Capital Resources in the Annual Report for 
additional discussion regarding solvency regulation.

c.   Ratios of Earnings to Fixed Charges and Earnings to Combined
     Fixed Charges and Preferred Stock Dividends

The following table sets forth the Company's ratio of earnings to 
fixed charges and ratio of earnings to combined fixed charges and 
preferred stock dividends for the years ended December 31:

<TABLE>
<CAPTION>
(Millions)                             1996        1995       1994       1993       1992
                                       ____        ____       ____       ____       ____
<S>                                    <C>         <C>        <C>        <C>        <C>
Ratio of Earnings to Fixed Charges     2.45        4.97       4.74       (a)        1.90
Ratio of Earnings to Combined Fixed
  Charges and Preferred Stock
  Dividends                            2.10        4.97       4.74       (a)        1.90
<FN>

(a)  The Company reported a pretax loss from continuing operations in 1993 which 
     was inadequate to cover fixed charges by $1.0 billion.
</TABLE>

<PAGE> 27

For purposes of computing both the ratio of earnings to fixed 
charges and the ratio of earnings to combined fixed charges and 
preferred stock dividends, "earnings" represent consolidated 
earnings from continuing operations before income taxes, 
cumulative effect adjustments and extraordinary items plus fixed 
charges and minority interest.  "Fixed charges" consist of 
interest (and the portion of rental expense deemed representative 
of the interest factor) and includes the dividends paid to 
preferred shareholders of a subsidiary.  (See Note 14 of Notes to 
Financial Statements in the Annual Report.)  During 1992, 1993, 
1994 and 1995, there was no preferred stock outstanding.  As a 
result, the ratios of earnings to combined fixed charges and 
preferred stock dividends were the same as the ratios of earnings 
to fixed charges.

d.  Trademarks

The trademarks Aetna (Registered Trademark), Aetna U.S. Healthcare 
(Trademark application pending), U.S. Healthcare (Registered 
Trademark), and Aetna Retirement Services (Registered Trademark), 
together with the corresponding design logos are owned by the 
Company.  The Company considers these trademarks and its other 
trademarks and trade names important in the operation of its 
business.  However, the business of the Company is not dependent 
on any individual trademark or trade name.

e.  Miscellaneous

The Company had approximately 30,850 domestic employees at 
December 31, 1996.  In addition, the Company had approximately 
7,750 international employees at December 31, 1996 in its majority 
and wholly-owned non-U.S. subsidiaries.

Management believes that the Company's computer facilities, 
systems and related procedures are adequate to meet its business 
needs.  The Company's data processing systems and backup and 
security policies, practices and procedures are regularly 
evaluated by the Company's management and its internal auditors 
and are modified as considered necessary.

The federal government is a significant customer of the Aetna 
U.S. Healthcare segment and the Company, accounting for 
approximately 11% of the Company's consolidated revenue in 1996.  
No other customer accounted for 10% or more of the Company's 
consolidated revenues in 1996.  No other segment of the Company's 
business is dependent upon a single customer or a few customers, 
the loss of which would have a significant effect on the earnings 
of the segment.  See Note 17 of Notes to Financial Statements in 
the Annual Report regarding segment information.

The loss of business from any one, or a few, independent brokers 
or agents would not have a material adverse effect on the earnings 
of the Company or any of its segments.

<PAGE> 28

Item 2.  Properties.

The home office of the Company is a building complex located at 
151 Farmington Avenue, Hartford, Connecticut, with approximately 
1.6 million square feet.  The Company and certain of its 
subsidiaries also own or lease other space in the greater Hartford 
area, Blue Bell, Pennsylvania and Fairfield, New Jersey, as well 
as various field locations throughout the country.  The Company 
believes its properties are adequate and suitable for its business 
as presently conducted, including consideration of planned 
restructuring activities.

The foregoing does not include numerous investment properties held 
by the Company in its general and separate accounts.

Item 3.  Legal Proceedings.

The Company is involved in numerous lawsuits arising, for the most 
part, in the ordinary course of its business operations including 
litigation in its health business concerning benefit plan coverage 
and other decisions made by the Company, and alleged medical 
malpractice by participating providers.  While the ultimate 
outcome of litigation against the Company cannot be determined at 
this time, after consideration of the defenses available to the 
Company and any related reserves established, it is not expected 
to result in liability for amounts material to the financial 
condition of the Company, although it may adversely affect results 
of operations in future periods.

Item 4.  Submission of Matters to a Vote of Security Holders.

None.


<PAGE> 29

EXECUTIVE OFFICERS OF AETNA INC.*

The Chairman of the Company is elected and all other executive 
officers listed below are appointed by the Board of Directors of 
the Company at its Annual Meeting each year to hold office until 
the next Annual Meeting of the Board or until their successors are 
elected or appointed.  None of these officers have family 
relationships with any other executive officer or Director.

<TABLE>

<CAPTION>
                                                                       Business Experience
Name of Officer              Principal Position             Age *      During Past Five Years **
_______________              __________________             ___        ______________________   
<S>                          <C>                            <C>        <C>
Ronald E. Compton            Chairman and President         64          (1)

Richard L. Huber             Vice Chairman for
                             Strategy and Finance           60          (2)

Thomas J. Calvocoressi       Vice President and
                             General Counsel                43          (3)

Michael J. Cardillo          Executive Vice President,
                             Combined Health Operations***  53          (4)

Mary Ann Champlin            Senior Vice President,
                             Aetna Human Resources          49          (5)

Frederick C. Copeland, Jr.   Executive Vice President,
                             International***               55          (6)

Daniel P. Kearney            Executive Vice President,
                             Investments/Financial 
                             Services***                    57          (7)

Joseph T. Sebastinelli       Executive Vice President,
                             Combined Health Operations***  50          (8)

<FN>

*   As of February 28, 1997.

**  The Company was incorporated in 1996 in conjunction with the merger of Aetna 
    Services and U.S. Healthcare.  Aetna Services and U.S. Healthcare became 
    wholly-owned subsidiaries of the Company on July 19, 1996.  Except where noted,
    all of the named individuals became executive officers of the Company on
    July 19, 1996.  The business experience for each executive officer included in 
    this section reflects their prior position(s) with the former parent company or
    its subsidiaries as well as such officer's current position.

*** Executive Vice Presidents, in conjunction with certain other senior
    officers, are responsible for assisting the Chairman and President, and 
    Vice Chairman in setting policy and overall direction for the Company.


</TABLE>


<PAGE> 30

(1)
Mr. Compton has served as Chairman since March 1, 1992.  He is 
also President, a position he has held since July 1988.

(2)
Mr. Huber has served in his current position since February 1995.  
From September 1994 to February 1995, he served as President and 
Chief Operating Officer of Grupo Wasserstein Perella.  From 1990 
to September 1994, he served as Vice Chairman of Continental Bank.

(3)
Mr. Calvocoressi assumed his current position on January 1, 1997.  
From March 1996 to January 1997, he served as Vice President and 
Deputy General Counsel of Aetna.  He served as Vice President and 
Corporate Counsel from August 1994 to March 1996, and as Vice 
President and Counsel from July 1993 to August 1994 and as 
Counsel, Office of General Counsel from July 1991 to July 1993.

(4)
Mr. Cardillo has served in his current position since July 19, 
1996.  Additionally, he is Co-President of Aetna U.S. Healthcare 
since July 19, 1996.  Mr. Cardillo has been Co-President of U.S. 
Healthcare since 1995 and principal marketing officer since 1989.

(5)
Mrs. Champlin has served in her current position since November 
1992.  From February 1991 through November 1992 she served as Vice 
President, Aetna Human Resources. 

(6)
Mr. Copeland assumed his current position on July 19, 1996.  He 
also serves as President and Chief Executive Officer of Aetna 
International, Inc., a position he assumed in April 1996, after 
having served as President of Aetna International since July 1995.  
From January 1993 to July 1995, he served as Chairman, President 
and Chief Executive Officer of Fleet Financial Group.  From 
September 1987 to January 1993, he served as President and Chief 
Executive Officer of Citibank Canada.

(7)
Mr. Kearney has served in his current position since December 
1993.  From February 1991 to December 1993 he served as Group 
Executive responsible for investments and large case pensions.

(8)
Mr. Sebastianelli has served in his current position since July 
19, 1996.  Additionally, he is Co-President of Aetna U.S. 
Healthcare, a position he assumed on July 19, 1996.  Mr. 
Sebastianelli has been Co-President of U.S. Healthcare since 1995 
and principal medical administrative officer since 1994.  From 
1984 to 1994, Mr. Sebastianelli was the sole proprietor of 
Sebastianelli Law Associates.


<PAGE> 31

PART II

Item 5.  Market for Registrant's Common Equity
         and Related Stockholder Matters.

Aetna Inc.'s common stock is listed on the New York Stock 
Exchange.  Its symbol is AET.  As of January 31, 1997, there were 
23,132 record holders of the common stock.

The dividends declared and the high and low sales prices with 
respect to the Company's common stock for each quarterly period 
for the past two years are incorporated herein by reference from 
"Quarterly Data" in the Annual Report.

Information regarding restrictions on the Company's present and 
future ability to pay dividends is incorporated herein by 
reference from Note 16 of Notes to Financial Statements in the 
Annual Report.

In connection with the merger with U.S. Healthcare, the Company 
entered into an Amended and Restated Agreement with 
Leonard Abramson, former Chairman of U.S. Healthcare and currently 
a director of the Company.  Pursuant to the Agreement, 
Mr. Abramson performs certain consulting services and agreed 
generally not to compete with the Company.  As part of a payment 
due to Mr. Abramson in connection with the agreement generally not 
to compete, on July 19, 1996, Aetna Inc. issued 37,538 shares of 
its common stock to Mr. Abramson.  Based on the nature of the 
transaction and the investor, the transaction did not involve any 
public offering, and the issuance of the shares was made pursuant 
to Section 4(2) of the Securities Act of 1933.

Item 6.  Selected Financial Data.

The information contained in "Selected Financial Data" in the 
Annual Report is incorporated herein by reference.

Item 7.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations.

The information contained in "Management's Discussion and Analysis 
of Financial Condition and Results of Operations" in the Annual 
Report is incorporated herein by reference.

Item 8.  Financial Statements and Supplementary Data.

The 1996 Consolidated Financial Statements and the report of the 
registrant's independent auditors and the unaudited information 
set forth under the caption "Quarterly Data" are incorporated 
herein by reference to the Annual Report.

Item 9.  Changes in and Disagreements with Accountants on
         Accounting and Financial Disclosure.

None.



<PAGE> 32

PART III

Item 10.  Directors and Executive Officers of the Registrant.

Information concerning Executive Officers is included in Part I 
pursuant to General Instruction G to Form 10-K.

Information concerning Directors and concerning compliance with 
Section 16 (a) of the Securities Exchange Act of 1934 is 
incorporated herein by reference to the Proxy Statement.

Item 11.  Executive Compensation.

The information under the caption "Executive Compensation" in the 
Proxy Statement is incorporated herein by reference.

Item 12.  Security Ownership of Certain Beneficial Owners
          and Management.

The information under the caption "Security Ownership of Certain 
Beneficial Owners, Directors, Nominees and Executive Officers" in 
the Proxy Statement is incorporated herein by reference.

Item 13.  Certain Relationships and Related Transactions.

The information under the caption "Certain Transactions and 
Relationships" in the Proxy Statement is incorporated herein by 
reference.

PART IV 

Item 14.  Exhibits, Financial Statement Schedules
          and Reports on Form 8-K.

(a)  The following documents are filed as part of this report:

1.  Financial statements:

The Consolidated Financial Statements and the report of the 
registrant's independent auditors are incorporated herein by 
reference to the Annual Report.

2.  Financial statement schedules:

The supporting schedules of the consolidated entity are included 
in this Item 14.  See Index to Financial Statement Schedules on 
page 38.



<PAGE> 33

3.  Exhibits: *

(3)  Articles of Incorporation and By-Laws.

Aetna Inc. Amended and Restated Certificate of Incorporation, 
incorporated herein by reference to the Company's Registration 
Statement on Form S-4 (File No. 333-5791) filed on June 12, 1996.

Aetna Inc. Bylaws, as amended.

(4)  Instruments defining the rights of security holders,   
     including indentures.

Senior Indenture, dated July 1, 1996, between the Company, Aetna 
Services, Inc. (formerly Aetna Life and Casualty Company), and 
State Street Bank and Trust Company of Connecticut, National 
Association, as Trustee, incorporated herein reference to the 
Company's Form 10-Q filed on October 25, 1996.

Form of Subordinated Indenture between Aetna Services, Inc., Aetna 
Inc. and State Street Bank and Trust Company of Connecticut, 
National Association, as Trustee (including the forms of 
Subordinated Debt Securities and Subordinated Debt Guarantees), 
incorporated herein by reference to the Company's and Aetna 
Services, Inc.'s Registration Statement on Form S-3 (File No. 333-
07167) filed on June 28, 1996.

Designations, Rights and Preferences of 6.25% Class C Voting 
Preferred Stock, incorporated herein by reference to the Company's 
8-K filed on July 26, 1996.

Aetna Inc. Rights Agreement, incorporated herein by reference to 
the Company's 8-K filed on July 26, 1996.

Indenture, dated as of October 15, 1986, between Aetna Services, 
Inc. and The First National Bank of Boston, Trustee, incorporated 
herein by reference to Aetna Services, Inc.'s 1992 Form 10-K.

First Indenture Supplement, dated as of August 1, 1996, to 
Indenture, dated as of October 15, 1986, between Aetna Services, 
Inc. and State Street Bank and Trust Company, as Successor 
Trustee, incorporated herein by reference to the Company's Form 
10-Q filed on October 25, 1996.

Indenture, dated as of August 1, 1993, between Aetna Services, 
Inc. and State Street Bank and Trust Company of Connecticut, 
National Association, as Trustee, incorporated herein by reference 
to Aetna Services, Inc.'s Registration Statement on Form S-3 (File 
No. 33-50427).

First Indenture Supplement, dated as of August 1, 1996, to the 
Indenture dated as of August 1, 1993 between Aetna Services, Inc. 
and State Street Bank and Trust Company of Connecticut, National 
Association, as Trustee, incorporated herein by reference to the 
Company's Form 10-Q filed on October 25, 1996.

<PAGE> 34

3.  Exhibits (Continued): *

Written Action, dated as of November 15, 1994, establishing the 
terms of Series A Preferred Securities of Aetna Capital L.L.C., 
incorporated herein by reference to Aetna Services, Inc.'s Form 
8-K filed on November 22, 1994.

Subordinated Indenture, dated as of November 1, 1994, between 
Aetna Services, Inc. and The First National Bank of Chicago, as 
Trustee, incorporated herein by reference to Aetna Services, 
Inc.'s Form 8-K filed on November 22, 1994.

First Indenture Supplement, dated as of August 1, 1996, to the 
Indenture, dated as of November 1, 1994, between Aetna Services, 
Inc. and The First National Bank of Chicago, as Trustee, 
incorporated herein by reference to the Company's Form 10-Q filed 
on October 25, 1996.

Payment and Guarantee Agreement, dated November 22, 1994, of Aetna 
Services, Inc. with respect to Aetna Capital L.L.C., incorporated 
herein by reference to Aetna Services, Inc.'s Form 8-K filed on 
November 22, 1994.

Payment and Guarantee Agreement, dated as of August 1, 1996, of 
Aetna Inc. with respect to Aetna Capital L.L.C., incorporated 
herein by reference to the Company's Form 10-Q filed on October 
25, 1996.

Amendment No. 1, dated as of August 1, 1996, to the Fiscal Agency 
Agreement, dated as of July 17, 1986, between Aetna Services, Inc. 
and State Street Bank and Trust Company, as successor Fiscal 
Agent, incorporated herein by reference to the Company's Form 10-Q 
filed on October 25, 1996.

(10)  Material contracts.

Employment Agreement, dated as of March 30, 1996, by and between 
U.S. Healthcare, Inc. and Joseph Sebastianelli, incorporated 
herein by reference to the Company's Form 10-Q filed on October 
25, 1996.**

Employment Agreement, dated as of March 30, 1996, by and between 
U.S. Healthcare, Inc. and Michael Cardillo, incorporated herein by 
reference to the Company's Form 10-Q filed on October 25, 1996.**

Stock Purchase Agreement, dated as of November 28, 1995, between 
The Travelers Insurance Group Inc. and Aetna Services, Inc. 
relating to the purchase and sale of 100% of the Common Stock of 
The Aetna Casualty and Surety Company and The Standard Fire 
Insurance Company, incorporated herein by reference to Aetna 
Services, Inc.'s 1995 Form 10-K.

Letter Agreement, dated as of January 19, 1995, between Aetna 
Services, Inc. and Richard L. Huber, incorporated herein by 
reference to Aetna Services, Inc.'s 1995 Form 10-K.**

<PAGE> 35

3.  Exhibits (Continued): *

Employment Agreement, dated as of January 29, 1996, between Aetna 
Services, Inc. and Ronald E. Compton, incorporated herein by 
reference to Aetna Services, Inc.'s 1995 Form 10-K.**

Employment Agreement, dated as of December 19, 1995, between Aetna 
Services, Inc. and Daniel P. Kearney, incorporated herein by 
reference to Aetna Services, Inc.'s 1995 Form 10-K.**

The 1984 Stock Option Plan of Aetna Life and Casualty Company 
and amendments thereto, incorporated herein by reference to the 
1992 Form 10-K. **

Letter Agreement, dated as of January 31, 1996, between Aetna 
Services, Inc. and The Travelers Insurance Group Inc., 
incorporated herein by reference to Aetna Services, Inc.'s Form 
10-Q filed on April 26, 1996.

Amendment, dated as of April 2, 1996, to Stock Purchase Agreement, 
dated as of November 28, 1995, between Aetna Services, Inc. and 
The Travelers Insurance Group Inc., incorporated herein by 
reference to Aetna Services, Inc.'s Form 10-Q filed on April 26, 
1996.

Registration Rights Agreement, dated as of March 30, 1996, between 
the Company and Leonard Abramson, incorporated herein by reference 
to Aetna Services, Inc.'s Form 10-Q filed on April 26, 1996.

Amendment No. 1, dated as of May 30, 1996, to the Registration 
Rights Agreement, dated as of March 30, 1996, between the Company 
and Leonard Abramson, incorporated herein by reference to the 
Company's Registration Statement on Form S-4 (Registration No. 
333-5791) filed on June 12, 1996.

Amended and Restated Agreement, dated as of May 30, 1996, between 
the Company and Leonard Abramson, incorporated herein by reference 
to the Company's Registration Statement on Form S-4 (Registration 
No. 333-5791) filed on June 12, 1996.

The Aetna Inc. 1996 Stock Incentive Plan, incorporated herein by 
reference to the Company's Registration Statement on Form S-4 
(Registration No. 333-5791) filed on June 12, 1996.

The Aetna Inc. Annual Incentive Plan, incorporated herein by 
reference to the Company's Registration Statement on Form S-4 
(Registration No. 333-5791) filed on June 12, 1996.

The Aetna Inc. Non-Employee Director Deferred Stock and Deferred 
Compensation Plan, as amended.

<PAGE> 36

3.  Exhibits (Continued): *

The Supplemental Pension Benefit Plan for Certain Employees of 
Aetna Services, Inc., incorporated herein by reference to the 
Company's Form 10-Q filed on October 25, 1996.

Amendment No. 1, dated March 1, 1996 to Letter Agreement, dated 
January 19, 1995, between Aetna Services, Inc. and
Richard L. Huber, incorporated herein by reference to the 
Company's Registration Statement on Form S-4 (Registration No. 
333-5791) filed on June 12, 1996.**

Amended and Restated U.S. Healthcare, Inc. Savings Plan, 
incorporated herein by reference to U.S. Healthcare, Inc.'s 1995 
Form 10-K filed on March 25, 1996.

Amended and Restated Pension Plan for Employees of U.S. 
Healthcare, Inc., incorporated herein by reference to U.S. 
Healthcare, Inc.'s 1995 Form 10-K filed on March 25, 1996.

Split Dollar Insurance Agreement, dated as of February 1, 1990, 
among Madlyn K. Abramson, Marcy A. Shoemaker (formerly Marcy 
Abramson), Nancy Wolfson, Judith Abramson and David B. Soll, and 
U.S. Healthcare, Inc., and the related Collateral Assignment 
Agreement, dated as of February 1, 1990, among Madlyn K. Abramson, 
Marcy A. Shoemaker (formerly Marcy Abramson), Nancy Wolfson, 
Judith Abramson and David B. Soll, and U.S. Healthcare, Inc., 
incorporated herein by reference to U.S. Healthcare, Inc.'s 1995 
Form 10-K filed on March 25, 1996.

Split Dollar Insurance Agreement, dated as of January 21, 1991, 
among Marcy A. Shoemaker (formerly Marcy Abramson), Nancy Wolfson, 
Judith Abramson, David B. Soll, Jerome Goodman and Edward M. 
Glickman, and U.S. Healthcare, Inc., and the related Collateral 
Assignment Agreement, dated as of January 21, 1991, among Marcy A. 
Shoemaker (formerly Marcy Abramson), Nancy Wolfson, Judith 
Abramson, David B. Soll, Jerome Goodman and Edward M. Glickman, 
and U.S. Healthcare, Inc., incorporated herein by reference to 
U.S. Healthcare, Inc.'s 1995 Form 10-K filed on March 25, 1996. 

Description of Deferred Compensation Plan, incorporated herein 
by reference to U.S. Healthcare, Inc.'s 1995 Form 10-K filed on 
March 25, 1996.

Voting Agreement, dated as of March 30, 1996, among Leonard Abramson, 
Aetna Life Insurance Company and Aetna Life Insurance and Annuity 
Company, incorporated herein by reference to Aetna Services, Inc.'s 
Form 10-Q filed on April 26, 1996.

Agreement and Plan of Merger, dated as of March 30, 1996, among 
Aetna Services, Inc., U.S. Healthcare, Inc., the Company, Antelope 
Sub, Inc. and New Merger Corporation, incorporated herein by 
reference to Aetna Services, Inc.'s Form 10-Q filed on April 26, 
1996. 

Amendment No. 1, dated as of May 30, 1996, to the Agreement and 
Plan of Merger, dated as of March 30, 1996, among Aetna Services, 
Inc., U.S. Healthcare, Inc., the Company, Antelope Sub. Inc. and 
New Merger Corporation, incorporated herein by reference to the 
Company's Registration Statement on Form S-4 (Registration No. 
333-5791) filed on June 12, 1996.


<PAGE> 37

3.  Exhibits (Continued): *

Aetna Services, Inc. Credit Facility, incorporated herein by 
reference to Aetna Services, Inc.'s Report on Form 8-K filed on July 
16, 1996.

Notification from Aetna Services, Inc. dated October 22, 1996 
electing to reduce Credit Facility to $1.5 billion.

Description of certain arrangements not embodied in formal documents, 
as described under the headings "Director Compensation" and 
"Executive Compensation", incorporated herein by reference to the 
Aetna Services, Inc. 1996 Proxy Statement.

(11)  Statement re computation of per share earnings.

Incorporated herein by reference to Note 1 of Notes to Financial 
Statements in the Annual Report.

(12)  Statement re computation of ratios.

Statement re:  computation of ratio of earnings to fixed charges for 
the Company for the years ended December 31, 1996, 1995, 1994, 1993 
and 1992 and Aetna Services for the year ended December 31, 1996.

Statement re:  computation of ratio of earnings to combined fixed 
charges and preferred stock dividends for the Company for the years 
ended December 31, 1996, 1995, 1994, 1993 and 1992 and Aetna Services 
for the year ended December 31, 1996.

(13)  Annual Report to security holders.

Selected Financial Data, Management's Discussion and Analysis of 
Financial Condition and Results of Operations, Consolidated Financial 
Statements and the report of the Company's independent auditors, and 
unaudited Quarterly Data from the Annual Report.

(21)  Subsidiaries of the registrant.

A listing of subsidiaries of Aetna Inc.

(23)  Consents of experts and counsel.

Consent of Independent Auditors to Incorporation by Reference in the 
Registration Statements on Form S-3 and Form S-8.

(24)  Powers of attorney.

(27)  Financial data schedule.

(b)   Reports on Form 8-K

The Company filed a report on Form 8-K on October 25, 1996, relating 
to the merger with U.S. Healthcare, Inc. including unaudited 
condensed consolidated pro forma financial statements of the Company 
for the nine and twelve months ended September 30, 1996 and December 
31, 1995, respectively.

*   Exhibits other than those listed are omitted because they are not
    required or are not applicable.  Copies of exhibits are available 
    without charge by writing to the Office of the Corporate 
    Secretary, Aetna Inc., 151 Farmington Avenue, Hartford, 
    Connecticut  06156.

**  Management contract or compensatory plan or arrangement.

<PAGE> 38

INDEX TO FINANCIAL STATEMENT SCHEDULES
AETNA INC.
                                                          Page
                                                          ____

Independent Auditors' Report                               39


   I  Summary of Investments - Other than                  
      Investments in Affiliates as 
      of December 31, 1996                                 40

  II  Condensed Financial Information of the               
      Registrant:

      Aetna Inc. as of and for the year ended 
      December 31, 1996                                    41

      Aetna Services, Inc. (formerly Aetna Life 
      and Casualty Company) as of December 31, 1995
      and for the years ended December 31, 1995
      and 1994                                             47

 III  Supplementary Insurance Information as of            
      and for the years ended December 31, 1996,
      1995 and 1994                                        53

  IV  Reinsurance                                          56

   V  Valuation and Qualifying Accounts and Reserves       
      for the years ended December 31, 1996, 1995
      and 1994                                             57

Certain of the required information is shown in the Financial 
Statements or Notes thereto in the Annual Report.  Certain 
information has been omitted from the schedules filed because the 
information is not applicable.

Certain reclassifications have been made to 1995 and 1994 
financial information to conform to 1996 presentation.



<PAGE> 39

                   INDEPENDENT AUDITORS' REPORT
                   ____________________________


The Shareholders and Board of Directors
Aetna Inc.:


Under date of February 4, 1997, we reported on the consolidated 
balance sheets of Aetna Inc. and Subsidiaries as of December 31, 
1996 and 1995, 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, 1996, as contained in the 
1996 annual report to shareholders.  These consolidated financial 
statements and our report thereon are incorporated by reference in 
the annual report on Form 10-K for the year 1996.  In connection 
with our audits of the aforementioned consolidated financial 
statements, we also have audited the related financial statement 
schedules as listed in the accompanying index.  These financial 
statement schedules are the responsibility of the Company's 
management.  Our responsibility is to express an opinion on these 
financial statement schedules based on our audits.

In our opinion, such financial statement schedules, when 
considered in relation to the basic consolidated financial 
statements taken as a whole, present fairly, in all material 
respects, the information set forth therein.



                             By  /s/ KPMG Peat Marwick LLP
                                 _________________________
                                    (Signature)

                                     KPMG PEAT MARWICK LLP


Hartford, Connecticut
February 4, 1997


<PAGE> 40

                      AETNA INC. AND SUBSIDIARIES

                              SCHEDULE I

     Summary of Investments - Other than Investments in Affiliates

                        As of December 31, 1996

<TABLE>
<CAPTION>
                                                                          Amount
                                                                        at which
                                                                    shown in the
Type of Investment                           Cost        Value*    balance sheet
                                       __________    __________    _____________
(Millions)
<S>                                    <C>          <C>                <C>
Debt securities:
   Bonds:
     United States Government
       and government agencies
       and authorities                 $ 3,723.0    $ 3,773.1          $ 3,773.1
     States, municipalities and 
       political subdivisions              348.4        355.3              355.3
     U.S. Corporate securities:
       Utilities                         2,355.3      2,420.3            2,420.3
       Financial                         4,486.0      4,546.5            4,546.5
       Transportation/capital goods      2,373.7      2,492.8            2,492.8
       Health care/consumer products     1,754.0      1,803.7            1,803.7
       Natural resources                 1,287.7      1,317.9            1,317.9
       Other                             1,488.1      1,519.8            1,519.8
                                       _________    _________          _________
        Total U.S. Corporate
         securities                     13,744.8     14,101.0           14,101.0
     Foreign:
       Government, including political
         subdivisions                    2,407.5      2,505.4            2,505.4
       Utilities                           740.3        790.2              790.2
       Other                             3,376.3      3,513.1            3,513.1
                                       _________    _________          _________
        Total foreign securities         6,524.1      6,808.7            6,808.7
     Residential mortgage-backed
      securities:
       Pass-throughs                     1,771.5      1,848.4            1,848.4
       Collateralized mortgage 
        obligations                      2,665.8      2,764.7            2,764.7
                                       _________    _________          _________
        Total residential
         mortgage-backed securities      4,437.3      4,613.1            4,613.1
     Commercial/Multifamily
      mortgage-backed securities         1,131.5      1,144.3            1,144.3
     Other asset-backed securities       1,458.0      1,464.6            1,464.6
                                       _________    _________          _________
        Total bonds                     31,367.1     32,260.1           32,260.1
   Redeemable preferred stocks              74.3         76.2               76.2
                                       _________    _________          _________
        Total debt securities           31,441.4    $32,336.3           32,336.3
                                                    _________                   
                                                    _________                   

Equity securities:
   Common stocks:
     Public utilities                       16.1    $    20.9               20.9
     Banks, trust and insurance
      companies                            222.8        481.4              481.4
     Industrial, miscellaneous
      and all other                        591.6        683.0              683.0
                                       _________    _________          _________
        Total common stocks                830.5      1,185.3            1,185.3
   Nonredeemable preferred stocks          132.9        147.5              147.5
                                       _________    _________          _________
        Total equity securities            963.4    $ 1,332.8            1,332.8
                                       _________    _________          _________
                                                    _________                   

Short-term investments                     723.2                           723.2
Mortgage loans                           6,700.9                         6,700.9
Real estate                                850.2                           850.2
Policy loans                               707.3                           707.3
Other                                      713.4 (1)                       835.5 (2)
                                       _________                       _________    

        Total investments              $42,099.8                       $43,486.2
                                       _________                       _________
                                       _________                       _________
________________________
<FN>
*   See Notes 1 and 4 of Notes to Financial Statements in the Company's
    1996 Annual Report.

(1) Excludes investments in affiliates of $122.1 million.
(2) Includes investments in affiliates of $122.1 million.
</TABLE>

<PAGE> 41

                   AETNA INC. AND SUBSIDIARIES

                           SCHEDULE II

                 Condensed Financial Information

                            AETNA INC.

                       Statement of Income

<TABLE>
<CAPTION>

For the year ended December 31,
(Millions)                               1996     
                                         ____     
<S>                                      <C>      
Net investment income                    $   1.2  
                                         _______  

       Total revenue                         1.2  

Operating expenses                            .2  
                                         _______  

       Total expenses                         .2  
                                         _______  

Income before income taxes 
 and equity in earnings of affiliates        1.0  
Current income taxes                          .5  
Equity in earnings of affiliates           204.6  
                                         _______  

Income from continuing operations          205.1  

Discontinued Operations, net of tax:  
 Income from operations                    182.2  
 Gain on sale                              263.7  
                                         _______
Net income                               $ 651.0  
                                         _______
                                         _______
________________________

<FN>

See Notes to Condensed Financial Statements.

</TABLE>


<PAGE> 42

                   AETNA INC. AND SUBSIDIARIES

                           SCHEDULE II

                 Condensed Financial Information

                            AETNA INC.

                          Balance Sheet
<TABLE>
<CAPTION>
As of December 31,
(Millions, except share data)                  1996     
                                               ____     
<S>                                            <C>      
         ASSETS

Investments:
   Short-term investments                     $     8.8
   Investments in affiliates                   10,842.3 
                                              _________ 
     Total investments                         10,851.1 
Cash and cash equivalents                          26.9 
Due from affiliates                                 6.0 
Affiliate dividends receivable                    100.0 
Deferred income taxes                               4.0 
                                              _________ 
Total assets                                  $10,988.0 
                                              _________ 
                                              _________ 

         LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
   Dividends payable to shareholders          $    36.9 
   Other liabilities                               40.1 
   Current income taxes                            21.3 
                                              _________ 
         Total liabilities                         98.3 
                                              _________ 

Shareholders' Equity:
   Class C Voting Mandatorily
    Convertible Preferred Stock
    ($.01 par value; 15,000,000 shares 
    authorized; 11,655,546 issued
    and outstanding)                              865.4 
   Common stock ($.01 par value; 500,000,000
     shares authorized; 150,084,799 issued; 
     and 150,084,799 outstanding)               4,032.8 
   Net unrealized capital gains                   340.0 
   Retained earnings                            5,651.5 
                                              _________ 
       Total shareholders' equity              10,889.7 
                                              _________ 

         Total                                $10,988.0 
                                              _________ 
                                              _________ 
________________________
                        
<FN>
See Notes to Condensed Financial Statements.
</TABLE>

<PAGE> 43

                   AETNA INC. AND SUBSIDIARIES

                           SCHEDULE II

                 Condensed Financial Information

                            AETNA INC.

                Statement of Shareholders' Equity

<TABLE>
<CAPTION>
                                                      Class C
                                                       Voting   
                                                  Mandatorily  
                                                  Convertible            Net Unrealized
For the year ended December 31, 1996                Preferred  Common     Capital Gains   Retained   Treasury
(Millions, except share data)         Total            Stock   Stock      (Losses) (1)    Earnings      Stock 
_____________________________________________________________________________________________________________
<S>                                   <C>         <C>          <C>        <C>             <C>        <C>
Balances at December 31, 1995         $ 7,272.8   $       -    $ 1,448.2  $   641.1       $ 5,195.6  $ (12.1)
____________________________________________________________________________________________________________ 
Net income                                651.0                                               651.0
Change in net unrealized capital gains
  or losses                              (301.1)                             (301.1)
Class C Voting Mandatorily Convertible
 Preferred stock issued for U.S. 
 Healthcare merger (11,655,546 shares)    865.4       865.4
Common shares issued for U.S.
 Healthcare merger (34,988,615 shares)  2,580.1                  2,580.1
Stock options issued for U.S. 
 Healthcare merger                         24.8                     24.8
Common stock issued for benefit plans
  (1,563,491 shares)                       75.1                     75.1                             
Repurchase of common shares 
  (1,194,400 shares)                      (83.3)                   (83.3)
Common stock dividends                   (170.0)                                             (170.0)         
Preferred stock dividends                 (25.1)                                              (25.1)
Treasury stock retired                        -                    (12.1)                               12.1
                                      ______________________________________________________________________
Balances at December 31, 1996         $10,889.7    $   865.4   $ 4,032.8  $   340.0       $ 5,651.5  $     -  
____________________________________________________________________________________________________________  

<FN>
See Notes to Condensed Financial Statements.

(1) Excludes unrealized capital gains and losses attributable to assets supporting
    discontinued products and to assets supporting experience rated contracts.

</TABLE>


<PAGE> 44

                    AETNA INC. AND SUBSIDIARIES

                           SCHEDULE II

                  Condensed Financial Information

                            AETNA INC.

                     Statement of Cash Flows

<TABLE>
<CAPTION>
For the year ended December 31,
(Millions)                                          1996       
                                                    ____       
<S>                                                 <C>        
Cash Flows from Operating Activities:
 Net income                                         $ 651.0    
 Adjustments to reconcile net income
  to net cash provided by operating activities:
   Income from Discontinued Operations               (182.2)
   Equity in earnings of affiliates                  (204.6)   
   Gain on sale of Discontinued Operations           (263.7)   
   Other, net                                          27.7   
                                                    _______   
     Net cash provided by operating activities         28.2   
                                                    _______   
Cash Flows from Investing Activities:
 Proceeds from sales of short-term investments        184.4    
 Cost of investments in short-term investments       (193.2)   
 Cost of investment in U.S. Healthcare             (5,243.9)   
 Capital contributions to affiliates                 (500.0)   
 Dividends received from affiliates                 5,938.0    
 Other, net                                            35.2   
                                                    _______   
   Net cash provided by investing activities          220.5    
                                                    _______    
Cash Flows from Financing Activities:
 Stock issued under benefit plans                      75.1    
 Common shares repurchased                            (83.3)   
 Dividends paid to shareholders                      (237.3)   
                                                    _______    
   Net cash used for financing activities            (245.5)   
                                                    _______    
Net increase in cash and cash equivalents               3.2    
Cash and cash equivalents, beginning of year           23.7    
                                                    _______    
Cash and cash equivalents, end of year              $  26.9    
                                                    _______    
                                                    _______    
________________________
<FN>
See Notes to Condensed Financial Statements.
</TABLE>

<PAGE> 45

                    AETNA INC. AND SUBSIDIARIES

                           SCHEDULE II

                  Condensed Financial Information

                            AETNA INC.

              Notes to Condensed Financial Statements

1.  Background of Organization

Aetna Inc. was incorporated under the Stock Corporation Act of the 
state of Connecticut on March 25, 1996 for the purpose of 
effectuating the combination of Aetna Services, Inc. (formerly 
Aetna Life and Casualty Company) ("Aetna Services") and U.S. 
Healthcare, Inc. ("U.S. Healthcare") in accordance with the terms 
of the Agreement and Plan of Merger dated as of March 30, 1996.  
Aetna's merger with U.S. Healthcare was consummated on July 19, 
1996.  As a result of the merger, Aetna Services and U.S. 
Healthcare are each direct wholly-owned subsidiaries of Aetna Inc.

The accompanying condensed financial statements include the 
results of operations of Aetna Services from January 1, 1996 and 
of U.S. Healthcare from July 19, 1996 which are reflected as 
Equity in Earnings of Affiliates on the Statement of Income.  
These financial statements should be read in conjunction with the 
Consolidated Financial Statements and Notes thereto in the Annual 
Report.

2.  Guarantee of Debt Securities 

Aetna Inc. has fully and unconditionally guaranteed the payment of 
all principal, premium, if any, and interest on all outstanding debt 
securities of Aetna Services, including the $348,000,000 9 1/2% 
Subordinated Debentures due 2024 (the "Subordinated Debentures") 
issued to Aetna Capital L.L.C., a wholly-owned subsidiary of Aetna 
Services.  Aetna Capital L.L.C. has issued $275,000,000 of redeemable 
preferred stock and the Subordinated Debentures represent 
substantially all of the assets of Aetna Capital L.L.C.  See Note 13 
to the Consolidated Financial Statements in the Annual Report for a 
description of outstanding debt.

3.  Dividends

Cash dividends paid to Aetna Inc. by Aetna Services and U.S. 
Healthcare for the year ended December 31, 1996 were $5.3 billion 
and $.6 million, respectively.  This included the dividend by 
Aetna Services of the net proceeds from the sale of the property-
casualty operations.  The dividends from Aetna Services were used 
to finance the cash portion of the U.S. Healthcare merger 
consideration.  See Note 16 to the Consolidated Financial 
Statements in the Annual Report for a description of dividend 
restrictions.


<PAGE> 46

                    AETNA INC. AND SUBSIDIARIES

                           SCHEDULE II

                  Condensed Financial Information

                            AETNA INC.

        Notes to Condensed Financial Statements (Continued)

4.  Accounting Changes

See Note 1 to the Consolidated Financial Statements in the Annual 
Report for a description of accounting changes.


5.  Discontinued Products

See Note 9 to the Consolidated Financial Statements in the Annual 
Report for a description of discontinued products.


6.  Sales of Subsidiaries

See Note 3 to the Consolidated Financial Statements in the Annual 
Report for a description of the sales of subsidiaries.


7.  Severance and Facilities Charges

See Note 8 to the Consolidated Financial Statements in the Annual 
Report for a description of the severance and facilities charges.


8.  Income Taxes

See Note 10 to the Consolidated Financial Statements in the Annual 
Report for a description of income taxes.



<PAGE> 47

                   AETNA INC. AND SUBSIDIARIES

                           SCHEDULE II

                 Condensed Financial Information

                       AETNA SERVICES, INC.

                       Statements of Income

<TABLE>
<CAPTION>

For the years ended December 31,
(Millions)                               1995         1994
                                         ____         ____
<S>                                      <C>          <C>
Premiums                                 $   1.2      $   1.5
Net investment income (expense)              1.0         (7.9)
Net realized capital losses                  (.2)        (7.9)
                                         _______      _______ 

       Total revenue                         2.0        (14.3)

Current and future benefits                   .4           .9
Operating expenses                          39.2         32.1
Interest expense                           108.3         92.5
                                         _______      _______

       Total benefits and expenses         147.9        125.5
                                         _______      _______

Losses before income taxes 
 (benefits) and equity in earnings 
 of affiliates                            (145.9)      (139.8)
Income taxes (benefits):
  Current                                  (57.2)       (23.2)
  Deferred                                   3.1        (19.4)
Equity in earnings of affiliates           565.7        506.6
                                         _______      _______

Income from continuing operations          473.9        409.4

Income (Loss) from Discontinued 
 Operations, net of tax                   (222.2)        58.1
                                         _______      _______

Net income                               $ 251.7      $ 467.5
                                         _______      _______
                                         _______      _______

________________________

<FN>
See Notes to Condensed Financial Statements.

</TABLE>


<PAGE> 48

                   AETNA INC. AND SUBSIDIARIES

                           SCHEDULE II

                 Condensed Financial Information

                       AETNA SERVICES, INC.

                          Balance Sheet
<TABLE>
<CAPTION>
As of December 31,
(Millions, except share data)                  1995     
                                               ____     
<S>                                            <C>      
         ASSETS

Investments:
   Debt securities, available for sale
    at fair value (cost of $3.9)               $    3.9 
   Equity securities, at market
     (cost $18.4)                                  14.9 
   Short-term investments                          10.2 
   Other                                            8.7 
   Investments in affiliates:
     Insurance and financial services
       companies                                4,830.4 
     International insurance and
       financial services companies               780.2 
     Discontinued Operations                    3,932.8 
                                              _________ 
         Total investments                      9,581.1 
Cash and cash equivalents                          23.7 
Premiums due and other receivables                  5.6 
Due from affiliates                                61.3 
Accrued investment income                           3.2 
Deferred income taxes                             304.8 
Other assets                                       43.2 
                                              _________ 
         Total assets                         $10,022.9 
                                              _________ 
                                              _________ 

         LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
   Insurance reserve liabilities              $    45.8 
   Dividends payable to shareholders               79.2 
   Long-term debt                                 958.0 
   Short-term debt                                329.9 
   Other liabilities                              238.7 
   Liability for postretirement
    benefits other than pensions                  609.5 
   Due to affiliates                              356.0 
   Current income taxes                           133.0 
                                              _________ 
         Total liabilities                      2,750.1 
                                              _________ 

Shareholders' Equity:
   Common stock (no par value; 
     250,000,000 shares authorized;
     115,013,675 issued; and
     114,727,093 outstanding)                   1,448.2 
   Net unrealized capital gains                   641.1 
   Retained earnings                            5,195.6 
   Treasury stock, at cost                        (12.1)
                                              _________ 
       Total shareholders' equity               7,272.8 
                                              _________ 

         Total                                $10,022.9 
                                              _________ 
                                              _________ 
________________________
                        

<FN>
See Notes to Condensed Financial Statements.

</TABLE>

<PAGE> 49

                   AETNA INC. AND SUBSIDIARIES

                           SCHEDULE II

                 Condensed Financial Information

                      AETNA SERVICES, INC.

                Statements of Shareholders' Equity

<TABLE>
<CAPTION>

                                                             Net Unrealized
Two years ended December 31, 1995                Common      Capital Gains    Retained   Treasury
(Millions, except share data)         Total      Stock        (Losses) (1)    Earnings      Stock
_________________________________________________________________________________________________
<S>                                   <C>         <C>        <C>              <C>        <C>
Balances at December 31, 1993         $ 7,043.1   $ 1,422.0  $   648.2        $ 5,103.3  $(130.4)
________________________________________________________________________________________________ 
Net income                                467.5                                   467.5          
Change in net unrealized capital gains
  or 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                   (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          
Change in net unrealized capital gains
  or 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                   (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 Condensed Financial Statements.
(1) Excludes unrealized capital gains and losses attributable to assets supporting
    discontinued products and to assets supporting experience rated contracts.

</TABLE>


<PAGE> 50

                    AETNA INC. AND SUBSIDIARIES

                           SCHEDULE II

                  Condensed Financial Information

                       AETNA SERVICES, INC.

                     Statements of Cash Flows

<TABLE>
<CAPTION>
For the years ended December 31,
(Millions)                                          1995         1994
                                                    ____         ____
<S>                                                 <C>          <C>
Cash Flows from Operating Activities:
   Net income                                       $ 251.7      $ 467.5
   Adjustments to reconcile net income
    to net cash used for operating activities:
     Loss (Income) from Discontinued Operations       222.2        (58.1)
     Decrease (Increase) in premiums due and
      other receivables                               116.4        (12.3)
     Increase in accrued investment income             (1.6)        (0.3)
     Depreciation and amortization                      0.1          0.1
     Increase in income taxes                           0.5         93.1
     Net decrease in other assets and other
      liabilities                                     (70.3)       (19.7)
     Increase in insurance reserve liabilities         45.2          0.1
     Equity in earnings of affiliates                (565.7)      (506.6)
     Net realized capital losses                        0.2          7.9
     Amortization of net investment discounts          (0.2)        (0.2)
     Other, net                                       (36.0)       (90.6)
                                                    _______      _______ 
       Net cash used for operating activities         (37.5)      (119.1)
                                                    _______      _______ 
Cash Flows from Investing Activities:
 Proceeds from sales of:
   Equity securities                                      -          1.1
   Short-term investments                           1,289.3      1,200.3
 Cost of investments in:
   Debt securities available for sale                  (0.1)        (3.8)
   Equity securities                                   (0.1)       (21.8)
   Short-term investments                          (1,272.2)    (1,139.6)
   Real estate                                            -         (1.0)
 Capital contributions to affiliates                 (303.0)           -
 Dividends received from affiliates                   451.7            -
 Other, net                                          (139.6)        17.2
                                                    _______      _______
   Net cash provided by investing activities           26.0         52.4
                                                    _______      _______
Cash Flows from Financing Activities:
   Issuance of long-term debt                            .6           .6
   Issuance of subordinated debentures
     to affiliates                                        -        348.1
   Stock issued under benefit plans                   121.2         23.3
   Repayment of long-term debt                       (100.8)           -
   Net increase in short-term debt                    329.9            -
   Dividends paid to shareholders                    (315.7)      (311.2)
                                                    _______      _______ 
     Net cash provided by financing activities         35.2         60.8
                                                    _______      _______
Effect of exchange rate on cash
 and cash equivalents                                     -          0.1
                                                    _______      _______
Net increase (decrease) in cash and
 cash equivalents                                      23.7         (5.8)
Cash and cash equivalents, beginning of year              -          5.8
                                                    _______      _______
Cash and cash equivalents, end of year              $  23.7      $     -
                                                    _______      _______
                                                    _______      _______
Supplemental disclosure of cash flow 
 information:
     Interest paid                                  $ 117.8      $  90.6
                                                    _______      _______
                                                    _______      _______
     Income taxes received, net                     $  70.2      $ 150.3
                                                    _______      _______
                                                    _______      _______
________________________

<FN>
See Notes to Condensed Financial Statements.

</TABLE>

<PAGE> 51

                    AETNA INC. AND SUBSIDIARIES

                           SCHEDULE II

                  Condensed Financial Information

                       AETNA SERVICES, INC.

              Notes to Condensed Financial Statements

The accompanying condensed financial statements should be read in 
conjunction with the Consolidated Financial Statements and Notes 
thereto in the Annual Report.  Certain reclassifications were made 
to 1994 financial information to conform to 1995 presentation.

1.  Merger with U.S. Healthcare, Inc.

The merger between Aetna Services, Inc. (formerly Aetna Life and 
Casualty Company) ("Aetna Services") and U.S. Healthcare, Inc. 
("U.S. Healthcare") was consummated on July 19, 1996.  As a result 
of the merger, Aetna Services and U.S. Healthcare are each direct, 
wholly-owned subsidiaries of Aetna Inc.  (See pages 41 through 46 
for condensed financial information of Aetna Inc. for the year 
ended December 31, 1996.)

2.  Long-Term Debt

<TABLE>
<CAPTION>
(Millions)                                    1995
                                              ____
<S>                                           <C>
     Long-term debt:
     Notes, 8 5/8% due 1998                   $    99.8
     Notes, 6 3/8% due 2003                       198.9
     Debentures, 6 3/4% due 2013                  198.4
     Eurodollar Notes, 7 3/4% due 2016             63.5
     Debentures, 8% due 2017                      199.1
     Debentures, 7 1/4% due 2023                  198.3
                                              _________
                                              $   958.0
                                              _________
                                              _________

</TABLE>

3.  Dividends 

The amounts of cash dividends paid to Aetna Services by insurance 
affiliates for the years ended December 31, 1995 and 1994 were as follows:

<TABLE>
<CAPTION>

(Millions)                        1995          1994
                                  ____          ____
<S>                               <C>           <C>
Consolidated subsidiaries         $451.7        $  -
                                  ______        ____
                                  ______        ____

</TABLE>

See Note 16 to the Consolidated Financial Statements in the Annual 
Report for a description of dividend restrictions from the 
consolidated insurance subsidiaries to Aetna Services.

4.  Due Affiliates

See Note 14 to the Consolidated Financial Statements in the Annual 
Report for a description of amount due to Aetna Capital L.L.C., a 
subsidiary of Aetna Services.

<PAGE> 52

                    AETNA INC. AND SUBSIDIARIES

                           SCHEDULE II

                  Condensed Financial Information

                        AETNA SERVICES, INC.

        Notes to Condensed Financial Statements (Continued)

5.  Accounting Changes

See Note 1 to the Consolidated Financial Statements in the Annual 
Report for a description of accounting changes.


6.  Discontinued Products

See Note 9 to the Consolidated Financial Statements in the Annual 
Report for a description of discontinued products.


7.  Sales of Subsidiaries

See Note 3 to the Consolidated Financial Statements in the Annual 
Report for a description of the sales of subsidiaries.


8.  Income Taxes

See Note 10 to the Consolidated Financial Statements in the Annual 
Report for a description of income taxes.


<PAGE> 53

                   AETNA INC. AND SUBSIDIARIES

                            SCHEDULE III

                Supplementary Insurance Information

            As of and for the year ended December 31, 1996

<TABLE>
<CAPTION>

                                Deferred                  Unpaid              Policyholders'
                                  policy      Future      claims                  funds left
                             acquisition      policy   and claim     Unearned       with the   Premium
Segment                            costs    benefits    expenses     premiums        Company   revenue
_______                      ___________   _________   _________    _________    ___________ _________
(Millions)
<S>                          <C>           <C>         <C>          <C>          <C>         <C>
Aetna U.S. Healthcare        $    39.2     $ 2,509.1   $ 1,724.3    $   252.8    $   579.9   $ 7,765.2
Aetna Retirement Services      1,488.1       3,935.8        30.1            -     10,868.1       180.7
International                    699.6       3,370.1        73.5         80.8        434.0     1,166.1
Large Case Pensions                  -       9,168.3         1.4            -      8,019.7       176.8
                             _________     _________   _________    _________    _________   _________

  Total                      $ 2,226.9     $18,983.3   $ 1,829.3    $   333.6    $19,901.7   $ 9,288.8
                             _________     _________   _________    _________    _________   _________
                             _________     _________   _________    _________    _________   _________


                                          Other income
                                            (including            Amortization of
                                    Net       realized    Current deferred policy    Other
                             investment  capital gains and future    acquisition operating    Premiums
Segment                      income (1)    and losses)   benefits         costs   expenses(3)  written(4)
_______                      _________   _____________ __________  ____________  _________   _________   
(Millions)
<S>                          <C>           <C>         <C>          <C>          <C>         <C>
Aetna U.S. Healthcare        $   414.6     $ 1,553.9   $ 6,622.4    $    11.9    $ 2,973.9   $ 6,982.8
Aetna Retirement Services      1,086.7         494.8     1,035.9         74.3        386.5           -
International                    334.2         130.7       996.8         73.9        388.4       292.0
Large Case Pensions            1,649.2         112.3     1,484.0 (2)        -         58.6           -
Corporate                         80.5          17.5           -            -        717.9           -
                             _________     _________   _________    _________    _________   _________

  Total                      $ 3,565.2     $ 2,309.2   $10,139.1    $   160.1    $ 4,525.3   $ 7,274.8
                             _________     _________   _________    _________    _________   _________
                             _________     _________   _________    _________    _________   _________

<FN>

(1) The allocation of net investment income is based upon the investment year method
    or specific identification of certain portfolios within specific segments.

(2) Includes reductions of the loss on discontinued products.

(3) Includes operating expenses, interest expense, amortization of goodwill and other
    acquired intangible assets and severance and facilities charges.

(4) Excludes life insurance business pursuant to Regulation S-X.

</TABLE>



<PAGE> 54

                    AETNA INC. AND SUBSIDIARIES

                            SCHEDULE III

                Supplementary Insurance Information

            As of and for the year ended December 31, 1995

<TABLE>

<CAPTION>

                                Deferred                  Unpaid               Policyholders'
                                  policy      Future      claims                   funds left
                             acquisition      policy   and claim      Unearned       with the    Premium
Segment                            costs    benefits    expenses      premiums        Company    revenue
_______                      ___________   _________   _________     _________    ___________  _________
(Millions)
<S>                          <C>           <C>         <C>           <C>          <C>          <C>
Aetna U.S. Healthcare        $    50.5     $ 2,485.2   $ 1,285.3     $    86.8    $   634.4    $ 5,949.7
Aetna Retirement Services      1,320.8       3,917.4        30.2             -     10,704.4        260.2
International                    581.8       2,691.9        82.8          55.3        851.7      1,038.5
Large Case Pensions                  -       9,278.4         1.5             -     10,708.2        264.9
Corporate                            -             -       163.3            .3            -            -
                             _________     _________   _________     _________    _________    _________
  Total                      $ 1,953.1     $18,372.9   $ 1,563.1     $   142.4    $22,898.7    $ 7,513.3
                             _________     _________   _________     _________    _________    _________
                             _________     _________   _________     _________    _________    _________


                                          Other income
                                            (including            Amortization of
                                    Net       realized    Current deferred policy      Other
                             investment  capital gains and future     acquisition  operating    Premiums
Segment                      income (1)    and losses)   benefits           costs   expenses(2)  written(3)
_______                     ___________  _____________ __________    ____________ __________   _________   
(Millions)
<S>                         <C>          <C>           <C>           <C>          <C>          <C>
Aetna U.S. Healthcare       $   364.0    $ 1,301.7     $ 5,100.4     $    22.2    $ 2,038.4    $ 5,016.5
Aetna Retirement Services     1,044.1        401.8       1,061.4          46.1        303.8            -
International                   308.7        112.6         911.2          70.8        350.5        234.8
Large Case Pensions           1,850.6        153.4       2,036.1             -        100.1            -
Corporate                         7.7          2.0             -             -        292.7            -
                            _________    _________     _________     _________   __________    _________
  Total                     $ 3,575.1    $ 1,971.5     $ 9,109.1     $   139.1    $ 3,085.5    $ 5,251.3
                            _________    _________     _________     _________    _________    _________
                            _________    _________     _________     _________    _________    _________


<FN>

(1) The allocation of net investment income is based upon the investment year method
    or specific identification of certain portfolios within specific segments.

(2) Includes operating expenses, interest expense and amortization of goodwill and other
    acquired intangible assets.

(3) Excludes life insurance business pursuant to Regulation S-X.

</TABLE>


<PAGE> 55

                   AETNA INC. AND SUBSIDIARIES

                            SCHEDULE III

                Supplementary Insurance Information

            As of and for the year ended December 31, 1994

<TABLE>

<CAPTION>

                               Deferred                  Unpaid              Policyholders'
                                 policy     Future       claims                  funds left
                            acquisition     policy    and claim     Unearned       with the      Premium
Segment                           costs   benefits     expenses     premiums        Company      revenue
_______                     ___________  _________    _________    _________    ___________    _________
(Millions)
<S>                         <C>          <C>          <C>          <C>          <C>            <C>
Aetna U.S. Healthcare       $    74.2    $ 2,487.4    $ 1,204.5    $   137.5    $    682.1     $  5,611.5
Aetna Retirement Services     1,139.6      3,274.1         25.3            -       9,106.2          235.7
International                   477.2      2,293.1         54.1         41.5         839.4          887.1
Large Case Pensions                 -      9,916.9          1.5            -      12,548.7          234.4
Corporate                           -            -        104.0           .4             -              -
                            _________    _________    _________    _________    __________     __________

  Total                     $ 1,691.0    $17,971.5    $ 1,389.4    $   179.4    $ 23,176.4     $  6,968.7
                            _________    _________    _________    _________    __________     __________
                            _________    _________    _________    _________    __________     __________



                                          Other income
                                            (including            Amortization of
                                    Net       realized    Current deferred policy      Other
                             investment  capital gains and future     acquisition  operating    Premiums
Segment                      income (1)    and losses)   benefits           costs   expenses(2)  written(3)
_______                     ___________  _____________ __________    ____________ __________   _________   
(Millions)
<S>                         <C>          <C>           <C>           <C>          <C>          <C>
Aetna U.S. Healthcare       $   351.6    $ 1,176.0     $ 4,755.1     $    40.5    $ 1,805.4    $ 4,669.8
Aetna Retirement Services       958.7        310.4         983.5          27.4        258.9            -
International                   308.4        101.5         782.7          65.7        349.8        199.0
Large Case Pensions           2,017.4        103.4       2,175.9             -         98.2            -
Corporate                        (4.7)        (5.0)         22.2             -        293.6            -
                            _________    _________     _________     _________    _________    _________

  Total                     $ 3,631.4    $ 1,686.3     $ 8,719.4     $   133.6    $ 2,805.9    $ 4,868.8
                            _________    _________     _________     _________    _________    _________
                            _________    _________     _________     _________    _________    _________

<FN>

(1) The allocation of net investment income is based upon the investment year method
    or specific identification of certain portfolios within specific segments.

(2) Includes operating expenses, interest expense and amortization of goodwill and other
    acquired intangible assets.

(3) Excludes life insurance business pursuant to Regulation S-X.

</TABLE>


<PAGE> 56

                          AETNA INC. AND SUBSIDIARIES

                                   SCHEDULE IV

                                   Reinsurance*

<TABLE>
<CAPTION>


For the years ended December 31,
(Millions)

                                                                                          Percentage
                                              Ceded to       Assumed                      of amount
                                  Gross       other          from other     Net           assumed
                                  amount      companies      companies      amount        to net
                                  ______      _________      _________      _________     ________ 
<S>                               <C>         <C>            <C>            <C>           <C>
1996**
____  
Premiums:
   Life insurance                 $ 2,248.2   $    85.6      $    42.8      $ 2,205.4          1.9%
   Accident and health insurance    7,073.2        62.1           23.5        7,034.6           .3
   Property-casualty insurance         95.1        50.1            3.8           48.8          7.8
                                  _________   _________      _________      _________             
   
         Total premiums           $ 9,416.5   $   197.8      $    70.1      $ 9,288.8           .8%
                                  _________   _________      _________      _________              
                                  _________   _________      _________      _________              

1995**
____  
Premiums:
   Life insurance                 $ 2,253.4   $    72.1      $    43.9      $ 2,225.2          2.0%
   Accident and health insurance    5,286.4        48.3            9.4        5,247.5           .2
   Property-casualty insurance         98.2        57.6              -           40.6            -
                                  _________   _________      _________      _________             

         Total premiums           $ 7,638.0   $   178.0      $    53.3      $ 7,513.3           .7%
                                  _________   _________      _________      _________              
                                  _________   _________      _________      _________              

1994**
____  
Premiums:
   Life insurance                 $ 2,150.3   $    64.6      $    37.8      $ 2,123.5          1.8%
   Accident and health insurance    4,852.3        63.0           17.1        4,806.4           .4
   Property-casualty insurance         98.1        60.5            1.2           38.8          3.1
                                  _________   _________      _________      _________             

         Total premiums           $ 7,100.7   $   188.1      $    56.1      $ 6,968.7           .8%
                                  _________   _________      _________      _________              
                                  _________   _________      _________      _________              

<FN>

 * Excludes intercompany transactions.

** Net life insurance in force was $381.4 billion, $362.8 billion and $358.1 billion 
   at December 31, 1996, 1995 and 1994, respectively.

</TABLE>

<PAGE> 57

                        AETNA INC. AND SUBSIDIARIES

                                   SCHEDULE V

                  Valuation and Qualifying Accounts and Reserves

<TABLE>

<CAPTION>


For the years ended December 31,
(Millions)
                                                                     Additions        
                                                             _________________________
                                                  Balance
                                                  at                      Charged
                                                  December  Charged       (credited)                 Balance
                     Balance at                   31, 1995  (credited)    to other                   at end
                     beginning                    as        to costs and  accounts-     Deductions-  of
                     of period     Adjustments    adjusted  expenses (1)  describe (2)  describe (3) period
                     __________    ___________    ________  ____________  ___________   ___________  _______
<S>                  <C>           <C>            <C>       <C>           <C>           <C>          <C>
1996
____
Asset valuation
reserves:
    Mortgage loans   $    604.9    $        -     $  604.9  $   (33.0)    $   (67.6)  $    (257.3)   $ 247.0
    Real estate           130.6          52.9 (4)    183.5       27.1           1.9         (70.4)     142.1
    Other                   2.8             -          2.8          -             -             -        2.8
                      _________    __________     ________  _________     _________   ___________    _______

                     $    738.3    $     52.9     $  791.2  $    (5.9)    $   (65.7)  $    (327.7)   $ 391.9
                     __________    __________     ________  _________     _________   ___________    _______
                     __________    __________     ________  _________     _________   ___________    _______

1995
____
Asset valuation
reserves:
    Mortgage loans   $    647.5    $    208.5 (5) $  856.0  $    10.4     $    (5.0)  $    (256.5)   $ 604.9
    Real estate           111.4             -        111.4        3.3          55.5         (39.6)     130.6
    Other                   6.0             -          6.0          -             -          (3.2)       2.8
                      _________    __________     ________  _________     _________   ___________    _______

                     $    764.9    $    208.5     $  973.4  $    13.7     $    50.5   $    (299.3)   $ 738.3
                     __________    __________     ________  _________     _________   ___________    _______
                     __________    __________     ________  _________     _________   ___________    _______

1994
____
Asset valuation 
reserves:
    Debt securities  $     79.0    $        -     $   79.0  $     3.8     $    14.7   $     (97.5)   $     -
    Mortgage loans      1,122.4             -      1,122.4       47.2         197.9        (720.0)     647.5
    Equity securities       3.3             -          3.3          -             -          (3.3)         -
    Real estate           214.4             -        214.4       (4.5)         24.2        (122.7)     111.4
    Other                   6.0             -          6.0          -             -             -        6.0
                     __________    __________     ________  _________     _________   ___________    _______

                     $  1,425.1    $        -     $1,425.1  $    46.5     $   236.8   $    (943.5)   $ 764.9
                     __________    __________     ________  _________     _________   ___________    _______
                     __________    __________     ________  _________     _________   ___________    _______
<FN>

(1) Charged to net realized capital (gains) losses in the Consolidated Statements of Income.

(2) Reflects additions to (reductions of) reserves related to assets supporting experience rated 
    contracts and discontinued products for which a corresponding reduction was included in 
    Policyholders' Funds Left with the Company in the Consolidated Balance Sheets and the reserve
    for future losses, respectively.

(3) Reduction in reserves is primarily a result of related asset write-downs (including foreclosures 
    of real estate) and sales.

(4) As a result of the adoption of FAS No. 121, valuation reserves at January 1, 1996 were 
    increased by $52.9 million in connection with the reversal of previously recorded accumulated
    depreciation related to properties held for sale.

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

</TABLE>




<PAGE> 58

                            SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities 
Exchange Act of 1934, the registrant has duly caused this report to be 
signed on its behalf by the undersigned, thereunto duly authorized.

Date:  February 28, 1997
                             AETNA INC.
                            (Registrant)

                             By  /s/ Robert J. Price                
                                     _______________________________
                                           (Signature)
                                     Robert J. Price 
                                     Vice President and
                                     Corporate Controller

Pursuant to the requirements of the Securities Exchange Act of 1934, this 
report has been signed below by the following persons on behalf of the 
registrant and in the capacities indicated on February 28, 1997.

                              
  *                                           *
___________________________________         _______________________________
Ronald E. Compton, Chairman,                Gerald Greenwald, Director
President and Director
(Principal Executive Officer)

  *                                           *
___________________________________         _______________________________
Leonard Abramson, Director                  Ellen M. Hancock, Director

  *                                           *
___________________________________         _______________________________
Betsy Z. Cohen, Director                    Michael H. Jordan, Director

  *                                           *
___________________________________         _______________________________
William H. Donaldson, Director              Jack D. Kuehler, Director

  *                                           *
___________________________________         _______________________________
Barbara Hackman Franklin, Director          Frank R. O'Keefe, Jr., Director

  *                                           *
___________________________________         _______________________________
Jerome S. Goodman, Director                 Judith Rodin, Director

  *                                           *
___________________________________         _______________________________
Earl G. Graves, Director                    Richard L. Huber, Vice Chairman
                                            for Strategy and Finance 
                                            (Principal Financial Officer)
                                            and Director
/s/ Robert J. Price
___________________________________
    Robert J. Price, Vice President 
    and Corporate Controller 
    (Controller)

* By  /s/ Robert J. Price
      _____________________________
          Robert J. Price  
          (Attorney-in-Fact)

<PAGE> 59


                                       INDEX TO EXHIBITS

<TABLE>

<CAPTION>

Exhibit                                                                          Filing
Number     Description of Exhibit                                                Method
______     ______________________                                                ______

<S>        <C>                                                                   <C>

(3)        Articles of Incorporation and By-Laws.

(3.1)      Aetna Inc. Bylaws, as amended.                                         Electronic

(10)       Material contracts.

(10.1)     The Aetna Inc. Non-Employee Director Deferred Stock and
           Deferred Compensation Plan, as amended.                                Electronic

(10.2)     Notification from Aetna Services, Inc. dated October 22, 1996
           electing to reduce Credit Facility to $1.5 billion.                    Electronic

(12)       Statement re computation of ratios.                                    Electronic

           Statement re:  computation of ratio of earnings to fixed charges 
           for the Company for the years ended December 31, 1996, 1995, 1994, 
           1993 and 1992 and Aetna Services for the year ended December
           31, 1996.

           Statement re:  computation of ratio of earnings to combined fixed
           charges and preferred stock dividends for the Company for the years
           ended December 31, 1996, 1995, 1994, 1993, and 1992 and Aetna 
           Services for the year ended December 31, 1996.

(13)       Annual Report to security holders.                                     Electronic

           Selected Financial Data, Management's Discussion and Analysis of
           Financial Condition and Results of Operations, Consolidated 
           Financial Statements and the report of the Company's independent 
           auditors, and unaudited Quarterly Data from the Annual Report.

(21)       Subsidiaries of the registrant.                                        Electronic

           A listing of subsidiaries of Aetna Inc.

(23)       Consents of experts and counsel.                                       Electronic

           Consent of Independent Auditors to Incorporation by Reference in
           the Registration Statements on Form S-3 and Form S-8.

(24)       Powers of attorney.                                                    Electronic

(27)       Financial data schedule.                                               Electronic


</TABLE>