NEW YORK (Reuters) - Health insurer Aetna Inc posted a 57 percent drop in fourth-quarter net income on investment losses and charges, but operating results were slightly ahead of analysts' targets.
The No. 3 U.S. health insurer also projected 2009 operating earnings in line with its prior forecast and analyst targets.
Aetna's results close a reporting season for major health insurers that has lacked any huge negative surprises, encouraging investors that stability may be returning to a sector whose shares were hammered in 2008.
"Thus far in the quarter, in-line results and maintenance of the 2009 outlook by several companies has been viewed favorably," Wachovia analyst Matt Perry said in a research note.
Aetna's net income fell to $194.7 million, or 42 cents per share, from $448.4 million, or 87 cents per share, a year earlier. The latest results included 42 cents a share in net realized capital losses, as well as charges for severance payments and a probe into out-of-network medical services.
Excluding those items, earnings were 96 cents per share, 2 cents ahead of the analysts' average forecast, according to Reuters Estimates. Several analysts said lower-than-expected taxes helped results.
Revenue at the Hartford, Connecticut-based company rose 8.7 percent to $7.76 billion.
Aetna's health plan membership stood at 17.7 million at the end of 2008, for annual growth of about 5 percent.
Aetna's medical benefit ratio, a key measure of the amount of premiums spent on medical claims, worsened to 80.6 percent in the fourth quarter from 79.2 percent a year earlier for its commercial segment that serves employers. Analysts at Oppenheimer & Co had expected 80.5 percent.
Aetna projected 2009 operating earnings of $3.85 to $3.95 per share. Analysts are looking for $3.88. The outlook equates to growth of about 12 percent to 14 percent, consistent with Aetna's previous forecast.
After a rough 2008 for HMO stocks, Aetna shares have risen 13 percent this year through Wednesday, higher than a 9 percent climb for the S&P Managed Health Care index <.GSPHMO>.
(Reporting by Lewis Krauskopf; Editing by Lisa Von Ahn)
