Health insurer Aetna’s 2nd-quarter profit falls 15 per cent but still tops Street expectations

Aetna Inc.’s second-quarter net income tumbled almost 15 per cent compared to last year when slower-than-expected growth in health care use helped earnings. The health insurer’s latest results still beat analyst expectations, and it raised its 2012 earnings forecast.

The Hartford, Conn., company said Tuesday that its net income fell to $457.6 million, or $1.32 per share, in the three months that ended June 30, down from $536.7 million, or $1.39 per share, a year ago.

Adjusted earnings, which exclude one-time items, were $1.31 per share. That topped the $1.25 per share that analysts surveyed by FactSet expected.

Revenue rose 6 per cent to $8.84 billion. Analysts, on average, expected $8.75 billion in revenue.

Aetna recorded a $188-million, pre-tax gain in last year’s quarter because claims leftover from previous quarters came in lower than expected, and the insurer was able to release some money it had held in reserve. A steeper than expected slowdown in the growth of health care use helped several insurers last year. Insurers and analysts say use is still growing slowly but has picked up a bit.

In the latest quarter, Aetna saw only a $38 million gain due to leftover claims.

Aetna also said health care costs, or the amount it paid in medical claims, rose 10 per cent, to $5.91 billion in the latest quarter.

Aetna now expects 2012 adjusted earnings to range between $5 and $5.10 per share. Analysts expect $5.04 per share.

Aetna is the third largest commercial health insurer based on both enrolment and revenue, trailing WellPoint and UnitedHealth. Health insurance is Aetna’s main product, but the company also sells dental, group life and disability coverage.