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Aetna 3Q profit falls on investment losses

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[October 29, 2008]  HARTFORD, Conn. (AP) -- Health insurer Aetna said Wednesday investment losses sent third-quarter profit tumbling 44 percent and prompted the company to cut its full-year outlook as the global economy remains volatile.

The company earned $277.3 million, or 58 cents per share, compared with $496.7 million, or 95 cents per share, a year earlier. Revenue rose 9.5 percent to $7.62 billion from $6.96 billion.

InsuranceExcluding capital losses of 48 cents per share and a 6 cents per share allowance recorded against a reinsurance recoverable from a unit of Lehman Brothers Holdings, the company earned $1.12 per share.

Analysts polled by Thomson Reuters expected profit of $1.12 per share on revenue of $7.92 billion.

"Despite the significant weakening of the U.S. economy as well as the unprecedented turmoil in the financial markets around the world, our core business performance remains solid," said Chairman and Chief Executive Ronald A. Williams in a statement.

Despite the weak stock market, Aetna said it expects to generate more than $1 billion in excess capital in 2008. Still, the company lowered its full-year outlook to between $3.90 and $3.95 per share from prior guidance of $4 per share, citing lower-than-expected investment income projections in the fourth quarter.

Analysts expected a profit of $4 per share for 2008.

The majority of the company's revenue came from commercial health care premiums, which rose 8 percent to $5.09 billion, while Medicare premiums nearly doubled to $1.21 billion and Medicaid premiums rose 72 percent to $154.3 million.

Overall membership grew 1 percent to 17.7 million, with gains in the commercial and Medicaid units more than offsetting a decline in Medicare membership. The medical benefit ratio, or what Aetna pays for health care costs, rose to 80.5 percent from 79.8 percent.

[Associated Press]

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.




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