Health insurers may acquisition 2010 abounding of challenges

INDIANAPOLIS – Best above bloom insurers concluded 2009 with better-than-expected profits and signs their acceptance losses may be slowing. But abeyant headaches remain.

Employers will abide to appeal lower ante in 2010 while medical costs rise. Medicare Advantage cuts will clasp some accumulation margins. And a still-unresolved bloom affliction check hangs over the industry.

Aetna, UnitedHealth Group, WellPoint and Humana accept all said they apprehend 2010 operating balance to bore from 2009, and several insurers offered balance projections for the new year that analysts accede conservative.

The alteration check agitation may be influencing those outlooks, according to Stifel Nicolaus analyst Tom Carroll.

Insurance stocks fluctuated aftermost year as Congress debated bills that would awning millions of uninsured bodies and rein in costs. Investors afraid about the appulse taxes, advantage requirements and added ameliorate possibilities would accept on the sector.

However,the check advance adjourned aftermost ages afterwards a Republican won a appropriate acclamation for a Massachusetts Senate seat.

The bristles better about traded bloom insurers — Cigna, Humana, Aetna, UnitedHealth, and WellPoint — all said the abridgement aching their bartering acceptance as companies cut jobs and bargain the cardinal of bodies covered by clandestine bloom allowance aftermost year.

"2009 accepted to be a difficult year with a cardinal of insurers accident added bartering acceptance than they originally expected," Carroll said in a blast account Thursday.

Several aggregation leaders said they apprehend those losses to abide into 2010 afore possibly slowing in the additional bisected of the year.

"If you don't see any blazon of uptick in employment, that could absolutely accomplish the year arduous for them," Edward Jones analyst Steve Shubitz said.

Aetna said Friday it expects to lose 350,000 associates in the aboriginal quarter, which is back best of its bloom advantage renews. That's an advance from its aboriginal apprehension for a accident of amid 600,000 and 650,000 members.

Overall, Aetna acquired 1.8 actor associates aftermost year, but it absent 590,000 due to job cuts.

"That's a big number, now we anticipate that abates in 2010," Aetna Chief Financial Officer Joe Zubretsky said in a blast account Friday. "But ... it's not alteration absolute fast. That is acutely a watch out for the industry in 2010, the application outlook."

A still-sagging abridgement hurts added than aloof acceptance ranks, Wells Fargo analyst Matt Perry wrote in a analysis agenda Friday. Companies disturbing with lower acquirement will accumulate burden on insurers back they try to accession premiums or authoritative fees.

"This is as abundant of a accident to managed affliction industry balance as acceptance losses, in our view," he wrote.