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Aetna 2Q profit rises 2.4 percent

By WTOP Staff

TOM MURPHY
AP Business Writer

Aetna’s second-quarter profit climbed more than 2 percent, as gains from an acquisition helped the health insurer top expectations and raise its 2014 earnings forecast again.

But the Hartford, Connecticut, company’s shares slipped Tuesday after it also reported a higher medical cost measurement than analysts expected and a slight performance dip for its health care segment, the biggest part of its business.

The insurer said a better performance from its group life and disability business helped grow earnings in the quarter, as did an additional month of results from Medicare and Medicaid coverage provider Coventry Health Care, which Aetna bought last year for $6.9 billion.

But the health care segment’s operating earnings, which exclude investment gains and losses, slipped about 1 percent to $584.3 million. Aetna’s medical-loss ratio for its commercial health coverage, which basically measures the percentage of premiums spent on medical care and some other costs, climbed to 80.6 percent from 79.1 percent.

“The headline numbers looked fine, but a deeper look into second quarter results is less flattering,” Citi analyst Carl McDonald said in a research note.

Overall, earnings for the nation’s third-largest health insurer climbed to $548.8 million, or $1.52 per share, from $536 million, or $1.49 per share, in last year’s quarter.

Adjusted earnings came to $1.69 per share. That topped average analyst expectations of $1.61 per share, according to Zacks Investment Research.

Aetna’s operating revenue, which also excludes investment gains and losses, climbed 25 percent to $14.5 billion revenue That also beat average Wall Street expectations for $13.97 billion.

The insurer’s enrollment climbed about 5 percent, compared with last year’s second quarter, to top 23 million people. A small part of that gain came from the health care overhaul, the massive law that aims to cover millions of uninsured people.

Aetna Inc. has added about 600,000 people so far this year through the overhaul’s public insurance exchanges, which began accepting enrollment last fall and help people find coverage often with help from income-based tax credits.

Aetna participated in 17 individual insurance exchanges, making it one of the largest players in that new market. The company said Tuesday it will only expand into one more, an exchange in Georgia, for coverage that starts in 2015. Competitor UnitedHealth started off much more slowly, participating in only four exchanges this year, but it plans to add as many as 20 for 2015.

Aetna Chief Financial Officer Shawn Guertin said his company plans more measured growth in part because it’s still learning about the newly insured population, most of whom only started coverage in April and May.

“We wanted to get substantial experience to learn and to figure out how to serve this population as best we could,” he said.

Aetna now expects full-year adjusted earnings to range between $6.45 and $6.60 per share, up from its April forecast of $6.35 to $6.55 per share.

Analysts expect, on average, earnings of $6.50 per share, according to FactSet.

Aetna shares fell nearly 4 percent, or $3.32, to $81.50 in midday trading, while broader indexes were nearly flat. The company’s stock had already advanced 24 percent since the start of the year, as of Monday’s close, and set several new all-time high prices.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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