Insurers report lower first-quarter results

Michelle Swafford

Friday, April 30, 2004 | 10:51 a.m.

Two health insurers that provide benefits in Las Vegas and across the country reported lower first-quarter profit Thursday and a third also reported lower results today.

PacifiCare Health Systems Inc., Aetna Inc. and Cigna Corp. reported profits and pledged to remain aggressive in Nevada.

Cypress, Calif.-based PacifiCare reported net income of $67 million, or 71 cents per share, down from $71 million, or 96 cents per share. The decline was a result of rising operating costs for its health plans. Earnings per share figures were adjusted to reflect a 2-for-1 stock split on Jan. 20.

Despite the dip in profit, PacifiCare beat analysts' expectations by 8 cents per share and raised its 2004 profit guidance to between $296 million and $306 million, or $3.07 to $3.17 per share.

Revenue for the quarter rose 8.2 percent to $2.96 billion from $2.74 billion. The increase was primarily attributed to an increase in commercial plan premiums of 10 percent per member per month and senior premium increases of 5 percent per member per month.

PacifiCare's commercial membership increased by 38,000 members to 2.2 million, while its private Medicare plans increased by 47,000 members to nearly 3 million. The company increased its projection for annual membership growth to between 5 percent and 6 percent.

In Nevada, commercial membership rose 25 percent in the first quarter to 34,600 members from 25,900 in the year-ago quarter.

Medicare plans dropped to 25,200 members from 26,600, which is consistent with an overall national decline in managed-cared Medicare membership, said Dan Yarbrough, director of investor relations.

PacifiCare is negotiating with local unions in hopes of boosting its Las Vegas presence but declined to comment on which unions it's talking to.

Separately, Hartford, Conn.-based Aetna Inc. reported a first quarter profit of $308.8 million, or $1.75 per share, which excludes $40 million in discontinued operations and is 2 percent below the year-ago quarter profit of $315.9 million, or $2.03 per share.

Revenue rose 8 percent to $4.82 billion from $4.47 billion as a result of increased membership.

Nationally, Aetna's commercial membership rose to 13.1 million from 12.8 million in the year-ago quarter. Private Medicare membership dropped to 102,000 members from 108,000. In Nevada, Aetna's membership rose to 65,227 members in the first quarter from 59,710 in the year-ago quarter.

"Nevada is an important market for us," Aetna spokeswoman Rachelle Cunningham said. "Across all of our (plan) segments we feel there's potential for growth."

Philadelphia-based Cigna Corp. today said first-quarter profit plunged 67 percent because of charges for restructuring and an accounting change.

However, the company raised its full-year earnings estimate for the second time this month. Cigna had net income of $78 million, or 55 cents a share, for the latest quarter, compared with $236 million, or $1.68 a share, a year earlier.

In Nevada, commercial membership dropped in the first quarter to 53,998 members from 62,456. Cigna's dental membership increased to 48,791 members from 40,792.

Cigna is enrolling members into a new product, Cignature, which is expected to increase membership among companies with 200 or so members looking for greater flexibility in their health plans, said Frank Benedetto, Cigna's vice president of sales for Arizona and Nevada.

"This will be our new product offering throughout the country," he said. "This is one of the largest product launches we've announced in years. From a product standpoint we feel pretty excited to get out in front of the competition, not only in Nevada, but (also) across the country."