Hartford health insurer Aetna Inc. said today its profit fell 57 percent in the fourth quarter as health care costs increased, and the company sustained large capital losses.
Aetna earned $194.7 million, or 42 cents per share, down from $448.4 million, or 87 cents per share. Aetna says profit from operations rose to 96 cents per share from 88 cents.
Revenue grew 8 percent to $7.76 billion. Excluding net realized capital losses, revenue rose 12 percent to $7.98 billion.
Thomson Reuters says analysts expected 94 cents per share and $7.96 billion in revenue.
Aetna spent 81.8 percent of its premium revenue on medical care in the quarter, compared to 80.3 percent a year ago.
Aetna, the third largest U.S. insurer based on medical enrollment, gained 33,000 medical members in the quarter, finishing the year with 17.7 million.
The company reported $198 million in net realized capital losses during the fourth quarter. Other one-time items included $35.6 million in severance costs, related to 1,000 job eliminations. Aetna also paid $20 million to establish a database to help consumers determine the price of out of network medical claims.
Aetna said in December it would eliminate almost 3 percent of its work force to cut costs as the economy slumped.
Aetna had used databases run by UnitedHealth Group Inc.’s Rocky Hill-based Ingenix subsidiary. A class action suit alleged the two companies manipulated the database to reduce their contributions. The American Medical Association and several state medical associations are currently suing the companies.
The totals were excluded from Aetna’s operating results. In the fourth quarter of 2007, net realized capital losses were $9.3 million.
In 2008, the company’s profit fell 24 percent to $1.38 billion, or $2.84 per share, from $1.83 billion, or $3.47 per share. Annual revenue grew 12 percent to $31 billion from $27.6 billion.
The full-year earnings includes 99 cents per share in capital losses and other one-time expenses. Profit from operations grew to $3.93 per share from $3.49 per share.
For this year, Aetna said it expects a profit of $3.85 to $3.95 per share from operations in 2009. Analysts are expecting $3.87 per share.
The company paid $28.78 billion in benefits for the year, up from $24.8 billion a year ago. For the year, 80.3 percent of Aetna’s premium revenue was spent on medical costs. That was up from 79.5 percent in 2007.
At 11 a.m., Aetna traded at $31.77, down 47 cents, or 1.46 percent. (AP)
