Aetna 4Q Profit Surges on Cost Controls

Thursday, February 9th 2006, 10:59 am
By: News On 6

HARTFORD, Conn. (AP) _ Aetna Inc., one of the nation's largest health insurance companies, reported Thursday that fourth-quarter profit rose 41 percent, as results benefited from membership growth, strong underwriting results and cost controls. Its shares rose nearly 4 percent, surpassing their 52-week high in early trading.

The company said quarterly income grew to $423 million, or $1.42 per share, from $300.7 million, or 98 cents per share, a year ago. Operating earnings totaled $1.39 per share, or $1.26 per share, excluding reserve development.

Revenue rose 14 percent to $5.9 billion from $5.2 billion a year earlier.

Analysts surveyed by Thomson Financial expected earnings of $1.23 per share on revenue of $5.78 billion.

Medical membership increased by 105,000 to 14.8 million for the quarter, the company said.

For the full year, the company posted net income of $1.63 billion, or $5.40 per share, down from $2.25 billion, or $7.15 per share, a year earlier.

Revenue rose 13 percent to $22.5 billion from $19.9 billion.

The company raised its full-year 2006 operating earnings outlook to a range of $5.57 to $5.63 per share, from prior guidance of $5.45 to $5.50 per share. Including stock option expensing, it expects operating earnings of $5.42 to $5.48 per share. The guidance does not account for a 2-for-1 stock split which will take effect on Feb. 17.

Analysts expect 2006 earnings $5.41 per share including stock options expense.

Aetna increased its full-year forecast for net medical membership growth to between 900,000 and 1 million, from a previous range of 800,000 to 900,000.

``I believe Aetna is very well positioned to sustain long-term earnings growth of at least 15 percent,'' President Ronald A. Williams, who is succeeding John W. Rowe as chief executive on Feb. 14, said during a conference call with analysts.