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.
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.