WellPoint 4Q profit dives on investment loss

[January 28, 2009]  NEW YORK (AP) -- Health insurer WellPoint Inc. said Wednesday its fourth-quarter profit dropped 61 percent due to a large loss on investments and as growing unemployment reduced the number of workers on its membership rolls.

The nation's largest insurer by enrollment said it earned $331.4 million, or 65 cents per share, down from $859.1 million, or $1.51 per share, a year ago. WellPoint's investments lost $350.5 million, or 69 cents per share. Revenue fell 3.2 percent to $15.07 billion from $15.57 billion.

Excluding the investment loss, WellPoint earned about $1.34 per share.

Analysts expected a profit of $1.36 per share and $15.56 billion in revenue, according to Thomson Reuters.

Its fourth-quarter results also included a charge of $24 million related to job cuts. WellPoint said earlier this month that it would eliminate about 1,500 jobs, or more than 3 percent of its staff.

The Indianapolis-based company, which operates Blue Cross and Blue Shield plans, said its membership fell by 288,000 in the fourth quarter, or 0.8 percent, as employers cut jobs. The commercial insurance business was hardest hit by the economic downturn.

WellPoint finished the year with 35 million members, up from about 34.8 million a year ago.

WellPoint spent 83.4 percent of premium revenue on medical care, up from 82.9 percent last year. While premium revenue grew in all businesses, it lost a key drug contract and had lower fully insured membership.

The company said premiums increased in all its business, and Medicare Advantage membership grew. However, WellPoint lost a prescription drug contract with the state of New York, and fully insured commercial and state-sponsored membership decreased.

The company earned $2.49 billion, or $4.76 per share, in 2008, including losses of $1.45 per share in investment and security investments, a write-down of 17 cents per share in its state sponsored business, and income tax benefits of 90 cents per share. That represented a drop of 25.5 percent from 2007, when it earned $3.35 billion, or $5.56 per share.

Total revenue, which includes revenue from investments, rose slightly to $61.25 billion from $60.17 billion.

Membership in state-sponsored plans fell by 206,000 for the year, and non Blue Cross and Blue Shield plans also lost members. Enrollment grew in its national and senior businesses.

WellPoint said it will offer an outlook for the year 2009 during an investor conference in February. Analysts currently expect a profit of $5.78 per share on $63.52 billion in revenue.

[Associated Press]

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