Aetna Posts 73% Net Income Gain For 4Q

By TOM MURPHY, AP Business Writer

INDIANAPOLIS (AP) – Health insurer Aetna Inc.’s fourth-quarter net income jumped 73 percent, as it continued to benefit from low use of health care and some key expenses fell.

The Hartford, Conn., insurer’s earnings and revenue topped Wall Street expectations due in part to slower-than-expected growth in health care use, a trend that has helped insurers routinely outperform the past several quarters. Many analysts expect this trend to continue into 2012.

Aetna said Wednesday that it earned $372.6 million, or $1.02 per share, in the three months that ended Dec. 31. That’s up from $215.6 million, or 53 cents per share, in the 2010 quarter. Revenue climbed slightly to $8.57 billion.

Earnings excluding capital gains and other items were 97 cents per share.

Analysts surveyed by FactSet expected, on average, earnings of 96 cents per share on $8.43 billion in revenue. Analysts typically exclude one-time items from their estimates.

Aetna is the third largest commercial health insurer based on both enrollment and revenue, trailing WellPoint Inc. and UnitedHealth Group Inc.

Health care costs, or the amount Aetna paid in medical claims, fell 2 percent in the quarter to $5.59 billion. The insurer also saw an after-tax benefit of about $63 million because claims leftover from prior periods came in lower than expected.

Aetna’s operating expenses also fell 3 percent to $1.83 billion.

Health insurance is Aetna’s main product, but the company also sells dental, group life and disability coverage. Its medical membership fell slightly, to about 18.5 million people, compared with the 2010 quarter.

Aetna reaffirmed its forecast for 2012 adjusted earnings of $5 per share. Analysts expect $5.08 per share.

Many say a pullback in consumer spending due to the sluggish economy is behind the slower medical use growth.

WellPoint said last week that health care use rose in the fourth quarter but remained lower than normal, and trends were affected more by the cost of care than the number of people receiving it. The insurer saw bigger hospital bills from more acute cases rather than more people heading to the hospital.

WellPoint missed analyst expectations with its performance, but that was largely due to a hit it took from its Medicare Advantage

UnitedHealth said its medical costs climbed in the quarter, but price increases for inpatient hospital care, not use, were the biggest reason behind it. Even so, UnitedHealth expects use to climb steadily through 2012.

Aetna’s shares rose 95 cents, or 2.2 percent, to $44.65 in premarket trading.

     (Copyright 2012 by The Associated Press.  All Rights Reserved.)


One Comment

  1. Libdumb says:

    Now I know why they deny to pay for anything associated with my medical needs. America’s Home Grown Terrorists.

  2. DisappointedWithAetna says:

    I have had the same experience with them. They have caused me a lot of stress that has made my illness worse. I’m too sick to fight with them but something needs to be done. They are robbing their customers blind.

Leave a Reply

Please log in using one of these methods to post your comment:

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

More From CBS Connecticut

At The Box Office
‘Jill on Money’ Business Breakfast: Buy Tickets Now

Listen Live