Aetna profit falls on costs and legal settlement

HARTFORD, Thu Jan 31, 2013 — Aetna Inc. fourth-quarter earnings fell sharply, the health insurer said on Thursday, as costs rose in parts of its employer-based insurance business and it took charges for settling litigation over out-of-network payments.

The company said CFO Joseph Zubretsky will lead a new business internally. His CFO slot will be filled by Shawn Guertin, who has been with Aetna since 2011 and was previously CFO of Coventry Health Care Inc., which Aetna is buying.

The company announced plans in August for the $5.6 billion acquisition of Coventry, part of a strategy to expand in government-sponsored healthcare programs like Medicare.

Zubretsky, Aetna’s CFO for six years, will now have broader responsibility, managing new businesses such as coordinated care.

“He’s been very well respected as a CFO so now he’s heading up operations of their largest business unit,” said Sarah James, an analyst at Wedbush Securities.

Shares in Aetna were off 1.4 percent, or 69 cents, at $48.26 in morning trading.

Aetna said fourth-quarter net income slid to $190.1 million, or 56 cents per share, from $372.6 million, or $1.02 per share, a year earlier.

Profit took a hit from a $78 million after-tax charge for the $120 million settlement reached in December for the class-action lawsuit. Patients and doctors had accused Aetna of systematically underpaying claims.

Excluding special items, the company reported earnings of 94 cents per share. Analysts on average were expecting 95 cents on that basis, according to Thomson Reuters I/B/E/S.

Aetna said operating earnings fell in its commercial business as healthcare costs rose. Increased costs related to a severe flu season were offset by a decline in the Northeast of medical services after Superstorm Sandy, which shut down businesses, schools and public transportation for weeks or more.

Leerink Swann analyst Jason Gurda said in a research note the decline in healthcare earnings came as the company collected less money than expected in insurance premiums.

Jobless claims fall to lowest in four and a half years

WASHINGTON, Thu Oct 11, 2012 – The number of Americans filing new claims for unemployment benefits fell sharply last week to the lowest level in more than four and a half years, according government data on Thursday that suggested improvement in the labor market.

Initial claims for state unemployment benefits fell 30,000 to a seasonally adjusted 339,000, the Labor Department said. It was the lowest number of new claims since February 2008.

The prior week’s figure was revised up to show 2,000 more applications than previously reported.

Economists polled by Reuters had forecast claims edging up to 370,0000 last week. The four-week moving average for new claims, a better measure of labor market trends, fell 11,500 to 364,000.

A Labor Department analyst said no states had been estimated for the latest report.

Recent data on the U.S. labor market has been encouraging.

Employers added a modest 114,000 jobs to their payrolls in September, but the unemployment rate dropped sharply to 7.8 percent, the lowest level since President Barack Obama took office.

Obama is in a tight fight with Republican challenger Mitt Romney less than a month before elections on Nov. 6, and the health of the labor market is an important factor for voters.

April hiring slows, unemployment rate falls to 8.1 percent

WASHINGTON, Fri May 4, 2012 – Employers decreased hiring for the second straight month in April but the unemployment rate still fell to 8.1 percent, giving mixed messages about the economy’s strength ahead of President Barack Obama’s November re-election bid.

Employers added 115,000 workers to their payrolls last month, the Labor Department said on Friday.

The reading keeps fears alive that the U.S. economy is losing momentum and dampens hopes that a stretch of strong winter hiring signaled a turning point for the recovery.

The unemployment rate ticked a tenth of a point lower to a three-year low, as people left the work force. The jobless rate is derived from a separate survey of households, which showed a drop in the number of jobs in April.

Still, the government revised upward its initial estimates for payroll growth in February and March by a combined 53,000. That left the six-month average of job growth at 197,000, nearly exactly where it would have been had April job growth come in as expected at 170,000.

“We’re still growing just gradually,” said Nigel Gault, an economist at IHS Global Insight in Lexington, Massachusetts.

“Hiring is coming back into line with what you would expect with sluggish growth.”

The report, which regularly sets the tone for financial markets around the world, could rattle nerves at the White House. Weak U.S. growth and high unemployment create a formidable headwind for Obama, who entered office during the darkest days of the 2007-09 recession.

His Republican challenger, Mitt Romney, repeatedly has accused Obama of doing too little to foster job growth.

The unemployment rate, which soared to as high as 10 percent during Obama’s first year in the office, held near 9 percent for most of last year before falling sharply over the winter.

Still, it remains about 2 percentage points higher than its average over the last 50 years, and the U.S. Federal Reserve thinks it probably will not post a full recovery for at least another several years.

Nevertheless, Fed Chairman Ben Bernanke said last month the central bank is providing enough support for the economy.

GE revenue lower than expected; expects a volatile year ahead

FAIRFIELD, Conn. ― General Electric Co’s. fourth-quarter revenue fell short of Wall Street expectations because of slower-than-expected growth in Europe, sending its shares down 2.5 percent in premarket trading.

The largest U.S. conglomerate expects a volatile year but it plans to build up its emerging-market presence and restructure its European operations.

Its profit came in 1 cent per share above Wall Street’s forecasts.

“We’re concerned about the revenue miss,” said Oliver Pursche, president of Gary Goldberg Financial Services in Suffern, New York. “That’s really what we’re focused on this earnings season. We’re not so concerned about being a penny above or below expectations, because that can be handled with accounting.”

The world’s biggest maker of jet engines and electric turbines said net income from continuing operations rose 0.6 percent to $3.93 billion, or 37 cents per share, compared with $3.90 billion, or 36 cents per share, a year ago.

Factoring out one-time items, profit came to 39 cents per share, above the 38 cents analysts had forecast, according to Thomson Reuters I/B/E/S.

Total revenue came to $37.97 billion, down from $41.23 billion and below the $40.03 billion analysts had expected. Factoring out the effects of last year’s sale of a majority stake in NBC Universal revenue would have been up 4 percent.

“We expect continued volatility in 2012 and have prepared for it by investing in new products and technology, expanding our growth-market footprint and taking important steps to strengthen risk management,” said CEO Jeff Immelt, in a statement. “We are restructuring our business in Europe to reflect market conditions.”

Goldman fourth-quarter profit falls but beats estimates

NEW YORK ― Goldman Sachs Group Inc’s. fourth-quarter profit fell 56 percent as trading and investment banking revenue plunged, but the bank managed to beat analysts’ expectations, which had dropped considerably in recent weeks.

Wall Street’s biggest bank by assets earned $978 million, or $1.84 per share, down from $2.2 billion, or $3.79 per share, a year earlier.

Analysts on average had expected a profit of $1.24 per share, according to Thomson Reuters I/B/E/S.

Goldman shares were up 1.4 percent at $99 in premarket trading after it released the earnings report.

“Despite seasonal weakness and a difficult operating environment, Goldman is able to at least hold its head up,” said Gary Townsend, president of Hill-Townsend Capital.

During the quarter, stock and bond markets were hit by volatility stemming from the European debt crisis, leading clients to pull back on risk and delay acquisitions and stock and bond offerings. As a result, Goldman and rivals including JPMorgan Chase & Co. and Citigroup Inc experienced sharp declines in profitability from capital markets operations.

While Goldman’s revenue dropped 30 percent to $6 billion from $8.6 billion a year earlier, the bank took steps to reduce expenses and reported lower taxes than in the year-earlier period. Operating expenses declined 7 percent to $4.8 billion, while Goldman’s tax provision of $234 million was down 78 percent.

The expense reductions allowed Goldman to report a better profit than dour estimates released by analysts in the weeks leading up to its report.

In mid-December Barclays analyst Roger Freeman lowered his fourth-quarter profit estimate for Goldman to 75 cents per share, calling 2011 “another year to forget” for Wall Street.