Hartford managed care provider Aetna Inc. raised its quarterly dividend to 15 cents a share from a penny share, a move company officials say reflects its confidence in its business model.
Aetna also said its fourth-quarter net income rose 30 percent due in part to better pricing and a slowdown in health care use that also has helped its competitors in the last few months of 2010.
Two other insurers with Hartford headquarters or operations, Hartford Financial Services Group Inc. and UnitedHealth Group Inc., have recently hiked their dividends.
“The decision to increase the dividend is testimony to the confidence we have in our strategy, our financial profile and our cash flow,” Chairman Ronald A. Williams said in a statement Friday.
Looking ahead, the company forecast a 2011 operating profit between $3.70 and $3.80 per share, much higher than the average analyst expectation of $3.27 per share, The Associated Press reports.
Several analysts said in Friday morning notes they were surprised by Aetna’s 2011 forecast.
Analysts have said insurers will be squeezed next year by health care use that is expected to return to normal levels, low interest rates and a new health care overhaul mandate regulating the percentage of premiums they spend on care.
Aetna Chief Financial Officer Joe Zubretsky told analysts Friday morning the earnings forecast would “modestly exceed” the insurer’s 2010 adjusted net income of $3.68 per share. He said Aetna faces the same factors the rest of the sector has to deal with in the new year.
But he said 2011 earnings per share will rise in part due to a lower share count and the company’s switch from a traditional defined benefit pension for its employees to an enhanced 401k plan.
The dividend will be paid on April 29 to common stockholders of record as of April 14.
The current dividend has been in place for about a decade, dating back to Aetna’s days when it was a multi-line insurer, spokesman Fred LaBerge said.
Aetna shares fell 13 cents to $33.27 in late morning trading.
