Morgan Stanley Comments On Aetna Following Recent Management Meetings

Morgan Stanely recently caught up with Aetna AET management to discuss the company's commission strategy as well as the overall backdrop for the company. While a source of some debate recently, Morgan Stanley does not see the commission strategy moving the needle much in 2011, either way. First, AET started rolling it out in February of this year, after the big January renewal season and giving it a more measured phase-in. Second, it is closely watching persistency rates and margins on any “churn” lives so it could tweak as needed. Morgan Stanley notes that any change would basically just default to the market status quo of including commissions. After lagging peers recently, AET may retrace some of that ground over the next few weeks relative to peers, as investors gain more comfort with manageability of the commission changes and achievability of company and Street expectations. Morgan Stanley's new higher forecasts should already have enough cushion to absorb any moderate adverse impact. Morgan Stanley has an Equal-weight rating on AET AET closed Friday at $36.79