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VIDEO: Aetna Reports Fourth-Quarter And Full-Year 2015 Results

Aetna have announced fourth-quarter 2015 operating earnings of $482.1 million, or $1.37 per share, a per-share increase of 12 percent over the fourth quarter of 2014. Full-year 2015 operating earnings were $2.7 billion, or $7.71 per share, a per-share increase of 15 percent over full-year 2014. Net income for the fourth quarter of 2015 was $320.8 million, or $0.91 per share. Full-year 2015 net income was $2.4 billion, or $6.78 per share. Net income for the fourth quarter and full year of 2015 includes $0.46 per share and $0.93 per share of net charges, respectively.

“Aetna achieved record annual operating revenue and operating earnings in 2015, and delivered full-year operating EPS that was above our most recent projection,” said Mark T. Bertolini, Aetna chairman and CEO. “Aetna’s strong 2015 results speak to our continued focus on disciplined pricing and execution of our growth strategy. Based on this performance, we are projecting 2016 operating earnings per share of at least $7.75.

“We continue to work diligently with the Department of Justice and state regulators toward final approval of our proposed acquisition of Humana, and we continue to advance our integration readiness plans. We have obtained seven of the necessary state approvals, and we believe we remain on track to close the transaction in the second half of 2016,” said Bertolini.

“We are quite pleased with the strength of our fourth quarter and full year results,” said Shawn M. Guertin, Aetna executive vice president and CFO. “Aetna’s operating results continue to be supported by strong cash flow and operating margins.

“Our Government business saw strong growth in membership and premiums, as well as improved underwriting margins. These reflect our ongoing execution of strategies to improve our margin profile in Medicare, as well as strong performance in our Medicaid business,” said Guertin.

Health Care segment 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 were $492.8 million for the fourth quarter of 2015 compared with $447.6 million for the fourth quarter of 2014. Operating earnings increased primarily as a result of higher underwriting margins in Aetna's Government business and higher fees and other revenue, partially offset by an increase in general and administrative expenses as described in Operating expenses above.
  • Net income was $360.9 million for the fourth quarter of 2015 compared with $373.9 million for the fourth quarter of 2014.
  • Operating revenues were $14.4 billion for the fourth quarter of 2015 compared with $14.1 billion for the fourth quarter of 2014. The increase is due primarily to membership growth in Aetna's Government business as well as higher premium yields in Aetna's Commercial business, partially offset by membership losses in Aetna's group Commercial Insured products. Total revenues were $14.4 billion and $14.1 billion for the fourth quarters of 2015 and 2014, respectively.
  • Sequentially, fourth-quarter 2015 medical membership remained flat at 23.5 million at December 31, 2015.
  • Aetna's fourth-quarter 2015 Commercial MBR improved over the fourth quarter of 2014 primarily as a result of increased favorable development of prior-period health care cost estimates primarily related to Aetna's Individual Commercial business.
  • Aetna's fourth-quarter 2015 Government MBR improved over the fourth quarter of 2014 primarily as a result of actions impacting revenue and medical costs designed to solve for the gap between Medicare premiums and medical costs and other expenses.
  • In the fourth quarter of 2015, Aetna experienced favorable development of prior-period health care cost estimates in its Commercial, Medicaid and Medicare products, primarily attributable to third-quarter 2015 performance.
  • Prior-years' health care costs payable estimates developed favorably by $840.6 million and $580.8 million during 2015 and 2014, respectively. This development is reported on a basis consistent with the prior years' development reported in the health care costs payable table in Aetna's annual audited financial statements and does not directly correspond to an increase in 2015 operating results.

Full-year 2015 operating earnings for Health Care were $2.7 billion, compared with $2.4 billion in 2014. Operating earnings increased primarily as a result of higher underwriting margins in Aetna's Government business, partially offset by an increase in general and administrative expenses. Full-year 2015 net income for Health Care was $2.4 billion compared with $2.2 billion in 2014.

Group Insurance segment results

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

  • Operating earnings were $21.7 million for the fourth quarter of 2015 compared with $21.3 million for the fourth quarter of 2014.
  • Net income was $17.8 million for the fourth quarter of 2015 compared with $23.2 million for the fourth quarter of 2014, primarily reflecting net realized capital losses during the fourth quarter of 2015.
  • Operating revenues were $618.3 million for the fourth quarter of 2015 compared with $615.6 million for the fourth quarter of 2014. Total revenues were $612.5 million and $618.5 million for the fourth quarters of 2015 and 2014, respectively.

Full-year 2015 operating earnings for Group Insurance were $136.0 million, compared with $171.0 million in 2014. Operating earnings for 2015 decreased compared with 2014, primarily due to lower underwriting margins in Aetna's Long-Term Care and Life products as well as lower net investment income, partially offset by higher underwriting margins in Aetna's Disability products. Full-year 2015 net income for Group Insurance was $135.5 million, compared with $179.6 million in 2014.

 

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