
<PAGE> 1
                                                            Exhibit 99.1

                      INDEPENDENT AUDITORS' REPORT

The Shareholders and Board of Directors of
Aetna Inc.

We have audited the accompanying consolidated balance sheet of Aetna Inc. 
and Subsidiaries as of April 22, 1996.  This consolidated balance sheet 
is the responsibility of Aetna Inc.'s management.  Our responsibility is 
to express an opinion on this consolidated balance sheet based on our 
audit.

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

In our opinion, the consolidated balance sheet referred to above presents 
fairly, in all material respects, the financial position of Aetna Inc. 
and Subsidiaries as of April 22, 1996 in conformity with generally 
accepted accounting principles.



Hartford, Connecticut
April 23, 1996                                /s/  KPMG Peat Marwick LLP


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                                                            Exhibit 99.1
                                                            (Continued)

                       AETNA INC. AND SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEET
                             April 22, 1996


<TABLE>
<S>                                                                        <C>

Assets: 
  Cash                                                                     $ 2,000
                                                                           _______
    Total assets                                                           $ 2,000
                                                                           _______
                                                                           _______

Stockholders' equity: 
  Common stock, (par value $1.00 per share; 20,000 shares authorized; 
    2,000 shares issued and 1,000 shares outstanding)                      $ 2,000
  Additional paid-in capital                                                 1,000
  Treasury stock, at cost (1,000 shares)                                    (1,000)
                                                                           _______

    Total stockholders' equity                                             $ 2,000
                                                                           _______
                                                                           _______
</TABLE>

The accompanying notes are an integral part of the consolidated balance sheet.


<PAGE> 3
                                                            Exhibit 99.1
                                                            (Continued)

                               AETNA INC.
                   NOTES TO CONSOLIDATED BALANCE SHEET


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 Life and Casualty Company 
    ("Aetna") 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 (the "Merger Agreement").  Aetna Inc. is equally owned 
    by Aetna and U.S. Healthcare.  Since its formation, Aetna Inc. has 
    organized two wholly-owned subsidiaries in accordance with the Merger 
    Agreement and has not conducted business or activity other than in 
    connection with the Merger Agreement (related expenses are the 
    responsibility of Aetna and U.S. Healthcare).   Aetna Inc. has no 
    contingent liabilities.

2.  Stockholders' Equity:

    The initial authorized capital stock of Aetna Inc. consists of 
    20,000 shares of Common Stock, par value $1.00 per share.  Two 
    thousand shares have been issued, 1,000 shares are held in treasury 
    and 1,000 shares are outstanding.

3.  Merger Agreement:

    Aetna and U.S. Healthcare entered into the Merger Agreement pursuant 
    to which they agreed to merge in a transaction, valued at that time, 
    at approximately $8.9 billion.  The Merger Agreement, which has been 
    approved by the board of directors of each company, calls for the 
    formation of a new holding company, Aetna Inc.  U.S. Healthcare 
    shareholders will receive $34.20 in cash, 0.2246 shares of Aetna Inc. 
    common stock together with Aetna Inc. rights and 0.0749 shares of 
    Aetna Inc. mandatorily convertible preferred stock for each share of 
    U.S. Healthcare common stock and each share of U.S. Healthcare 
    Class B Stock outstanding.  Each outstanding share of Aetna common 
    stock will be converted into a share of common stock of Aetna Inc.  
    All issued shares of the capital stock of Aetna Inc. immediately 
    prior to the merger date will be cancelled upon completion of the 
    mergers.  The authorized number of shares will be increased to effect 
    the transaction.  Immediately after the transaction, Aetna and U.S. 
    Healthcare will each be wholly-owned subsidiaries of Aetna Inc., and 
    Aetna Inc. will be owned approximately 78% by Aetna shareholders and 
    approximately 22% by U.S. Healthcare shareholders (approximately 72% 
    and approximately 28%, respectively, on a fully diluted basis).

    Aetna expects to finance the transaction with a combination of 
    $5.3 billion in cash ($3.9 billion from the net proceeds received 
    from the sale of its property-casualty operations and $1.45 billion 
    of additional bank debt, which may initially be financed with 
    commercial paper) and the issuance of $2.7 billion of new Aetna Inc. 
    common stock and $0.9 billion of Aetna Inc. mandatorily convertible 
    preferred stock.  The agreement is subject to approval by the 
    shareholders of both companies, receipt of required insurance, 
    healthcare and other regulatory approvals, and other customary 
    conditions.  The transaction is expected to close in the third 
    quarter of 1996.


