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Aetna Reports Solid Earnings

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By TOM MURPHY
AP Business Writer

Aetna Inc.’s third-quarter earnings rose 2 percent and trumped
expectations as revenue gains outweighed costs tied to paying off
debt and the insurer’s purchase of Coventry Health Care.

The Hartford, Conn., insurer said Thursday it earned $499.2
million, or $1.47 per share, in the three months that ended Sept.
30. That’s up from $490.4 million, or $1.30 per share, in last
year’s quarter.

Aetna earned $1.55 per share, excluding the one-time costs and
capital gains. That topped the average analyst forecast of $1.33
per share, according to FactSet.

Total revenue, which counts capital gains, climbed 5 percent to
$8.92 billion. Analysts expected $8.83 billion.

Aetna is the third-largest commercial health insurer based on
enrollment, trailing WellPoint Inc. and UnitedHealth Group Inc.
Health insurance is Aetna’s main product, but the company also
sells dental, group life and disability coverage.

The insurer said in August that it would spend $5.7 billion to
buy Coventry Health Care Inc., a Medicare and Medicaid coverage
provider. The deal will broaden Aetna’s Medicaid business a few
months before millions of additional people are expected to become
eligible for the state- and federally funded program for the needy
and disabled under President Barack Obama’s massive health care
overhaul.

It also will boost the company’s portion of business from the
federally funded Medicare program at a time when enrollment is
growing briskly in part because baby boomers are aging. Medicare
provides health coverage to people over age 65 and those who are
disabled.

Aetna recorded in the third quarter a charge of 4 cents per
share tied to that deal. It also recorded a loss of 7 cents per
share tied to the early payoff of some long-term debt.

The insurer’s health care premiums climbed 7 percent in the
quarter to $7.25 billion. Cost-cutting also helped. Operating
expenses fell nearly 10 percent to $1.64 billion.

Aetna also narrowed its 2012 earnings forecast on Thursday. It
now expects 2012 adjusted earnings of about $5.10 per share, the
high end of Aetna’s previous forecast for earnings of $5 to $5.10
per share. Analysts had expected $5.08 per share.

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

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