Aetna second quarter faced 15% decline in its profits

Aetna, Inc. is an American health insurance company. It provides its customers with traditional and consumer-directed healthcare benefits with products and related services such as medical, pharmaceutical, dental, behavioral health, group life, and disability plans. Aetna is in collaboration with an ACO to improve care management and fix payment models, said Internet search.

Recently Aetna announced second-quarter 2012 results with the earnings of $452.0 million, or $1.31 per share compared to the $1.35 per share reported in the second quarter of 2011. Favorable before-tax prior-period reserve development in the second quarters of 2012 and 2011 was approximately $38 million and $188 million, respectively. Excluding the after-tax impact, operating earnings were $427.9 million and $401.5 million in the second quarters of 2012 and 2011, respectively, and improved in 2012 mainly due to higher underwriting margins and increased membership in our Medicare business.

Summary of Aetna’s Second-Quarter 2012 Results

1. Total medical benefit ratio was 82.4 % in the second quarter 2012
2. Medical membership totaled 18.0 million members at June 30, 2012
3. Aetna now projects full-year 2012 operating earnings per share to be $5.00 to $5.10

Major reason for the 15% downfall in the second-quarter earnings was of a smaller benefit from surplus money set aside to cover earlier patient claims, said Online Business news. Aetna's overall performance is based on sustained execution on the fundamentals where memberships and revenues are rising rapidly with projecting latest medical cost trends on top.