Aetna Inc.'s (AET) fourth-quarter earnings rose 30% as the
health insurer's cost of medical claims compared with premiums
improved, though revenue and premiums declined.
Still, the results beat analysts' expectations and the company
projected earnings for the year of $3.70 to $3.80, while analysts
forecast $3.27.
Aetna's board instituted a quarterly dividend of 15 cents a
share, versus its previous 4-cent annal payout. The move will cost
an additional $225.9 million a year.
Aetna's commercial business has been benefiting from lower
medicals costs. However, increases in Medicaid and Medicare
membership haven't been enough to offset declining commercial
rolls.
This year health insurers face new federal minimums on the
portion of premiums that must be used for medical care, which has
raised questions about whether small plans will be able to remain
competitive. On Tuesday, Aetna stopped selling individual policies
in Colorado, where it has a relatively small presence.
Aetna reported a profit of $215.6 million, or 53 cents a share,
up from $165.9 million, or 38 cents a share, a year earlier.
Excluding restructuring-related costs, capital gains impacts and
other items, earnings climbed to 63 cents from 40 cents.
Revenue, excluding capital gains, decreased 2% to $8.51 billion
as premium revenue dropped 3.3%.
Analysts polled by Thomson Reuters most recently forecast
earnings of 62 cents on revenue of $8.4 billion.
Total medical membership was 18.5 million at year's end, falling
60,000 sequentially.
Aetna reported that its total medical cost ratio, or the amount
of premiums used to pay patient medical costs, declined to 83% from
85.4% a year earlier but rose from 81.8% in the third quarter.
The company has been aiming to diversify its revenue base. Aetna
last month completed its $500 million acquisition of Medicity,
increasing its presence in the health-records sector.
Shares closed Thursday at $33.27 and were inactive premarket.
The stock is up 9.1% in the past year.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
Tess.Stynes@dowjones.com