Hartford health insurer Aetna Inc. says its second-quarter profit rose 42 percent, as the percentage of premiums the company spent on medical care fell versus a year ago, The Associated Press reports.
The insurer said late Tuesday it earned $491 million, or $1.14 a share, in the three months ended June 30. That compares with net income of $346.6 million, or 77 cents a share, in the same period last year.
Aetna earned $450.2 million, or $1.05 a share, excluding one-time items. The company also raised its forecast for its 2010 operating earnings.
Total second-quarter revenue fell to $8.54 billion from $8.67 billion, in part due to a drop in premium revenue from lower commercial insured membership.
Analyst polled by Thomson Reuters forecast a profit of 74 cents per share on revenue of $8.49 billion. Analyst estimates usually exclude one-time costs and gains.
Health insurance is Aetna’s main product, but it also sells dental, group life and disability coverage.
Aetna credited its earnings increase on a higher commercial underwriting margin from favorable prior-quarter reserve development and improved performance.
The company, based in Hartford, Conn., reported $127.6 million in gains from favorable reserve development compared to a loss of $42.3 million a year ago. Most of the gains came from its commercial insurance business.
Last year, Aetna struggled with costs that rose faster than it expected when it set prices, due in part to the slumping economy. That caused it to reprice a big portion of its commercial insurance.
In the second quarter, the insurer spent 81.8 percent of its premium revenue on medical care, down from 86.8 percent. It spent 80.1 percent of its premium revenue on medical care for its commercial insurance business, down from 85.9 percent.
