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WellPoint gains confidence as profits rise

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WellPoint Inc.’s profit grew 4 percent in the second quarter and the company significantly hiked its full-year profit forecast.

The Indianapolis-based health insurer earned $722.4 million during the quarter, or $1.71 per share. Excluding investment gains that totaled 4 cents per share, WellPoint earned $1.67 per share.

On that basis, Wall Street analysts were expecting earnings of $1.55 per share, according to a survey by Thomson Reuters.

"Our quarterly results exceeded our expectation primarily due to higher-than-anticipated favorable reserve development and continued strong performance in our capital management areas,” said WellPoint CEO Angela Braly in a statement. “We are also seeing positive results in our core operations from many of the strategic initiatives we put in place over the last two years.”

WellPoint now expects to post profits of $6.30 for the year, up from a forecast of $6 per share the company gave in April.

The company continues to boost its per-share profit by repurchasing shares. In the second quarter, WellPoint spent $2.9 billion to buy back nearly 50 million shares of its own stock.

But revenue is falling as unemployment zaps members from its health insurance plans. In the second quarter, WellPoint’s revenue was $14.2 billion, excluding investment gains, down 7 percent from the same quarter a year ago.

Analysts expected WellPoint to post revenue of $14.6 billion.

WellPoint lost 343,000 members from its insurance plans in the second quarter. The company reiterated its forecast of having 33.1 million health plan members by the end of 2010.

WellPoint’s customers have moderated their spending on health care, however. The company said it spent 82.9 percent of customers’ premiums on medical care during the second quarter, down from 83.9 percent during the same quarter a year ago.

For all of 2010, WellPoint now expects its so-called medical loss ratio to be 83.9 percent, down from its April forecast of 84.3 percent.

Medical loss ratios are a critical part of the new health reform law for WellPoint and its health insurance peers. The new law will require insurers to pay as much as 85 percent of premiums on medical care or else return the difference to customers.

Even as WellPoint’s profits have picked up this year, fears about health reform legislation’s impact on WellPoint has weighed on the company’s shares. They have lost 9.4 percent of their value so far in 2010, closing Tuesday at $52.80 apiece.

WellPoint stock was down 3.4 percent, or $1.80 per share, in morning trading Tuesday.

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  1. Those of you yelling to deport them all should at least understand that the law allows minors (if not from a bordering country) to argue for asylum. If you don't like the law, you can petition Congress to change it. But you can't blindly scream that they all need to be deported now, unless you want your government to just decide which laws to follow and which to ignore.

  2. 52,000 children in a country with a population of nearly 300 million is decimal dust or a nano-amount of people that can be easily absorbed. In addition, the flow of children from central American countries is decreasing. BL - the country can easily absorb these children while at the same time trying to discourage more children from coming. There is tension between economic concerns and the values of Judeo-Christian believers. But, I cannot see how the economic argument can stand up against the values of the believers, which most people in this country espouse (but perhaps don't practice). The Governor, who is an alleged religious man and a family man, seems to favor the economic argument; I do not see how his position is tenable under the circumstances. Yes, this is a complicated situation made worse by politics but....these are helpless children without parents and many want to simply "ship" them back to who knows where. Where are our Hoosier hearts? I thought the term Hoosier was synonymous with hospitable.

  3. Illegal aliens. Not undocumented workers (too young anyway). I note that this article never uses the word illegal and calls them immigrants. Being married to a naturalized citizen, these people are criminals and need to be deported as soon as humanly possible. The border needs to be closed NOW.

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