Two of the nation's largest health insurers reported increased profit for the third quarter Wednesday despite falling enrollments, saying reduced healthcare costs helped boost their earnings.
WellPoint Inc., the country's largest insurer by enrollment, earned $739.1 million, or $1.84 a share, in the three-month period ended Sept. 30, compared with $730.2 million, or $1.53, for the same period the previous year. That was a 1.2% increase in net income for the Indianapolis insurer.
Aetna Inc., the third-largest insurer by enrollment, had $497.6 million in profit, or $1.19 a share, in its latest quarter, up from $326.2 million, or 73 cents, last year. Net income rose 53%.
Both companies face uncertainties moving into 2011, including rules in the new healthcare law that require insurers to spend at least 80% of premiums on medical claims or provide customer rebates.
The insurers' earnings follow third-quarter profits already reported by some competitors, including UnitedHealth Group Inc. and Humana Inc.
"I am pleased with our operating performance in 2010, which exceeded expectations going into the year," WellPoint Chief Executive Angela F. Braly told analysts in a conference call Wednesday.
Aetna Chief Executive Ronald A. Williams said in a statement that the Hartford, Conn., insurer had outpaced an "unusually weak 2009" so far this year.
"Our strong operating results were driven by a reduction in utilization of health care services after the surge we saw in 2009, combined with appropriate pricing and effective medical quality and cost management," Williams said.
Despite the increased profit, WellPoint and Aetna both saw revenue decline in the third quarter compared with the same period the year before, partly because of shrinking enrollments.
WellPoint's revenue dropped to $14.3 billion from $15.2 billion, down 5.7%. Membership fell to 33.5 million from 33.9 million. Braly said a delay in California rate hikes also depressed revenue. The company put premium increases on hold for six months after regulators raised questions about their size, leading to a $150-million loss this year, she said.
Aetna's revenue fell to $8.5 billion from $8.7 billion, a 2% decline, in large part because of smaller commercial enrollment, which fell to 18.5 million from 18.6 million.
WellPoint shares rose 30 cents to $56.05 on Wednesday. Aetna shares increased 87 cents to $30.84.