December 15, 2017

Aetna Reports Second Quarter 2013 Results

Hartford, CT – Aetna (NYSE: AET) recently announced second-quarter 2013 operating earnings of $549.0 million, or $1.52 per share, a per share increase of 16 percent over the second quarter of 2012. Net income for the second quarter of 2013 was $536.0 million, or $1.49 per share, and includes a $.16 per share gain on the reduction of the reserve for anticipated future losses on discontinued products and a $.09 per share benefit related to the settlement of a reinsurance recoverable. The positive impact on net income of these items was offset by $.23 per share of transaction and integration-related costs and $.05 per share of net realized capital losses.

“The second quarter marked a significant milestone for Aetna with the completion of our Coventry Health Care acquisition,” said Mark T. Bertolini, Aetna chairman, CEO and president. “Aetna’s strong quarterly results demonstrate the power of our diversified portfolio, and enable us to raise our operating earnings guidance again to $5.80 to $5.90 per share. At its midpoint, our revised guidance would represent growth of 14 percent in operating earnings per share in 2013, and 17 percent compound annual growth since 2010.

“We continued to make progress to transform the health care system on multiple fronts during the quarter, including launching an interactive consumer health and wellness campaign; signing seven more accountable care collaborations; and earning recognition by an independent research organization as having the most ‘transformational’ accountable care relationships in the industry,” said Bertolini.

“We are pleased by our second-quarter operating performance,” said Shawn M. Guertin, Aetna senior vice president and CFO. “Strong performance in our commercial insured and Medicaid businesses allowed us to post strong operating revenues and earnings while absorbing the impacts of sequestration and isolated pressure in our Medicare business.

“Aetna is executing on our growth strategy. Both our core and Healthagen businesses are performing well, and we are well-positioned for a successful Coventry integration. Our capital generation remains strong, and we will continue to deploy capital aggressively to create value for our shareholders,” said Guertin.

Total company results

  • Operating earnings were $549.0 million for the second quarter of 2013 compared with $452.0 million for the second quarter of 2012. Operating earnings increased 21 percent in the second quarter of 2013 primarily due to the acquisition of Coventry in May 2013 as well as higher underwriting margins in our underlying Commercial Health Care business.
  • Operating revenues for the second quarter of 2013 were $11.56 billion compared with $8.83 billion for the second quarter of 2012. The 31 percent increase is primarily the result of higher Health Care premiums in each of our Commercial, Medicare and Medicaid businesses from the acquisition of Coventry as well as growth in our underlying Medicare membership. Total Revenue was $11.54 billion and $8.84 billion for the second quarters of 2013 and 2012, respectively.
  • Operating Expenses were $2.04 billion for the second quarter of 2013. The operating expense ratio was 17.7 percent and 18.7 percent for the second quarters of 2013 and 2012, respectively. The improvement in the operating expense ratio is primarily driven by operating revenue growth and continued execution of our expense initiatives as well as the inclusion of Coventry and the related cost synergies. The total company expense ratio was 18.2 percent and 18.6 percent for the second quarters of 2013 and 2012, respectively.
  • Pre-tax Operating Margin was 8.4 percent for the second quarter of 2013 compared with 8.9 percent for the second quarter of 2012. For the second quarter of 2013, the after-tax net income margin was 4.6 percent compared to 5.2 percent for 2012.
  • Outstanding Shares were 372.1 million as of June 30, 2013. Share repurchases in the second quarter of 2013 totaled 7.2 million shares at a cost of $440.6 million. Shares issued during the second quarter of 2013 totaled 53.5 million, including 52.2 million shares issued in exchange for all the outstanding shares of Coventry common stock.

Health Care business results
Health Care, which provides a full range of insured and self-insured medical, pharmacy, dental and behavioral health products and services, reported:

  • Operating earnings of $559.2 million for the second quarter of 2013 compared with $443.5 million for the second quarter of 2012. Operating earnings increased 26 percent in the second quarter of 2013 primarily due to the acquisition of Coventry as well as higher underwriting margins in our underlying Commercial business.
  • Net income was $466.3 million for the second quarter of 2013 compared with $447.3 million for the second quarter of 2012.
  • Operating revenues of $10.87 billion for the second quarter of 2013 compared with $8.18 billion for the second quarter of 2012. The 33 percent increase is due primarily to the inclusion of Coventry revenue following the acquisition as well as higher premiums in our underlying Medicare business. Total revenue for the second quarter of 2013 was $10.85 billion compared with $8.19 billion for the second quarter of 2012.
  • Sequentially, second-quarter 2013 medical membership increased by 3.7 million driven by the addition of Coventry membership.
  • Prior-years’ health care costs payable estimates developed favorably by $369.6 million and $163.5 million during the first half of 2013 and 2012, respectively. This development does not directly correspond to an increase in our operating results for the six months ended June 30, 2013. The development is reported on a basis consistent with the prior years’ development reported in the health care costs payable tables in our annual audited financial statements.

Group Insurance business results
Group Insurance, which includes group life, disability and long-term care products, reported:

  • Operating earnings of $29.9 million for the second quarter of 2013 compared with $46.0 million for the second quarter of 2012 primarily reflecting lower underwriting margins in our life products.
  • Net income of $60.3 million for the second quarter of 2013 compared with $44.7 million for the second quarter of 2012. Net income for 2013 includes a $32.1 million after-tax benefit related to the settlement of a reinsurance recoverable.
  • Operating revenues of $582.4 million for the second quarter of 2013, a 11 percent increase over $525.9 million for the second quarter of 2012. Total Revenue was $587.1 million in the second quarter of 2013 and $523.9 million in the second quarter of 2012.

Large Case Pensions business results
Large Case Pensions, which manages a variety of discontinued and other retirement and savings products, primarily for qualified pension plans, reported:

  • Operating earnings of $3.8 million for the second quarter of 2013 compared with $3.9 million for the second quarter of 2012.
  • Net income of $57.5 million for the second quarter of 2013 compared with $7.0 million for the second quarter of 2012. Net income for the second quarter of 2013 includes a $55.9 million after-tax benefit related to the reduction of reserves for anticipated future losses on discontinued products primarily due to favorable investment performance as well as favorable retirement experience compared to assumptions we previously made in estimating the reserve.

The complete earnings release is available here: Aetna Second Quarter 2013 Results

Source: Aetna

  • RSS
  • Twitter
  • LinkedIn