Shares of Aetna (NYSE:AET) surged 6% to a 52-week high on Monday after the company revealed a first-quarter profit that crushed Wall Street estimates, fueled by gains in its commercial underwriting division and higher rates.
The Hartford, Conn.-based company posted net income of $586 million, or $1.50 a share, compared with $562 million, or $1.28 a share, in the same quarter last year, widely trumping the Street’s view of 97 cents.
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Earnings were helped primarily by higher commercial underwriting margins and premium rate increases, partially offset by lower commercial insured membership that led to a decline in Health Care premium revenues.
“We are pleased that the strong momentum we achieved last year continues into 2011,” Aetna CEO Mark Bertolini said in a statement. “Our core businesses are performing well with disciplined pricing and competitive new product designs.”
Revenue for the health insurer was $8.35 billion, down 2% from $8.54 billion, virtually matching the Street’s view of $8.38 billion.