Aetna profit tops estimates, raises forecast

Aetna is the latest health insurer to easily top profit expectations this quarter, although worries over the implementation for health reform has held back investor enthusiasm.

The No. 3 U.S. health insurer has advised investors that 2010 will be a "repositioning year," which it has said partly involves pricing its commercial plans to reflect increased medical costs that dragged down results in 2009.

Quarterly net income rose to $562.6 million, or $1.28 per share, from $437.8 million, or 95 cents per share, a year earlier.

Excluding a gain tied to a legal settlement, earnings were 98 cents per share. Excluding a further benefit from unused claim reserves, profit was 77 cents. Analysts on average expected 72 cents, according to Thomson Reuters I/B/E/S.

Revenue edged up to $8.62 billion.

The company spent 82.5 percent of premiums on medical costs, down from 83.0 percent a year earlier. In its commercial business including employer-based plans, that percentage dipped to 81.1 percent from 81.7 percent.

"Our first-quarter operating results reflect the impact of the significant actions we have taken to improve our performance, as demonstrated by the better-than-expected commercial medical benefit ratio," Aetna Chief Executive Officer Ron Williams said in a statement.

The company's enrollment stood at 18.69 million at the end of March, down about 2 percent from a year ago.

Aetna projected full-year operating earnings of $2.75 to $2.85 per share, up from a prior range of $2.55 to $2.65.

The company said in March that it expected first-quarter operating earnings to top the consensus Wall Street forecast, which was 66 cents per share at the time, although the company maintained its full-year outlook.

UnitedHealth Group Inc , WellPoint Inc and Humana Inc have all reported first-quarter profits well above Wall Street estimates.

(Reporting by Lewis Krauskopf; Editing by Lisa Von Ahn)