INDIANAPOLIS (AP) — UnitedHealth Group Inc. said Thursday its fourth-quarter profit rose 10 percent, trumping Wall Street expectations, as premiums climbed and a drop in health care use continued to help the insurer.

The Minnetonka, Minn., insurer said fewer people used the health care system in the fourth quarter compared to the same quarter of 2009, a trend that also helped insurers in the third quarter. That, plus improvements in claims payment accuracy, helped push down the percentage of premiums the insurer paid on medical care in the quarter.

UnitedHealth said it earned $1.04 billion, or 94 cents per share, in the three months that ended Dec. 31. That’s up from the $944 million, or 81 cents per share, a year ago. Revenue rose 10 percent to $24.03 billion from $21.78 billion.

Adjusted earnings were $1.05 per share, excluding a charge from the sale of a portion of its Ingenix business that the company also announced Thursday.

Analysts polled by FactSet had forecast a profit of 84 cents per share on $23.73 billion in revenue. Analysts typically exclude one-time items from their estimates.

UnitedHealth is the largest publicly traded health insurer based on total revenue. It is the first big health insurer to release its earnings every quarter, and many analysts and investors see it as a bellwether for the sector.

The company said premiums, the main portion of its revenue, grew 10 percent to $21.69 billion. Commercial enrollment edged up to 24.8 million from 24.6 million a year ago. That business includes employer-sponsored group coverage and offers higher profit margins than government-sponsored business like Medicaid.

The medical-loss ratio for the insurer’s UnitedHealthcare business sank to 81.2 percent in the fourth quarter from 85.8 percent in the same quarter of 2009, when insurers were hit with swine flu cases. These ratios, known as MLRs, measure the percentage of premiums spent on medical care.

The ratio will take on added importance this year because the health care overhaul will require insurers to meet minimum MLRs or pay rebates to customers.

UnitedHealth said the MLR dropped in part due to moderated health system use. Analysts and insurance executives have said health care use dropped compared to 2009 due to the swine flu claims and a decrease in consumer spending that typically comes with a struggling or recovering economy.

UnitedHealth backed its 2011 forecasts of $3.50 to $3.70 per share in profit and $100 billion in revenue. Analysts expect net income of $3.72 per share and $99.86 billion in revenue on average.

The profit forecasts represent a drop from the company’s 2010 performance. UnitedHealth’s full-year profit grew 21 percent, to $4.63 billion, or $4.10 per share. Its revenue increased 8 percent to $94.16 billion.

Heading into the new year, the insurer has said it expects health care use to revert to normal levels, which will increase costs, and it will incur added costs from benefits mandated by the health care overhaul.

Leerink Swann analyst Jason Gurda said in a research note that he thought the insurer’s guidance for the new year was conservative and will rise through the year.

But Citi analyst Carl McDonald said in a separate note that health care reform has “changed the prism for managed care plans.” He said last year’s performance won’t be repeated this year, as “a good chunk of the earnings upside in 2010 would have been returned to shareholders had minimum MLRs been in place for 2010.”

Shares of UnitedHealth fell 79 cents to $39.77 in late morning trading, while broader trading indexes were down slightly. The insurer’s stock price had climbed more than 9 percent from the start of the year through Wednesday.

McDonald said some investors may be disappointed the insurer didn’t raise its 2011 forecast.

(© Copyright 2011 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

Comments (13)
  1. albert says:

    Why is there a company with a profit motive between me and my healthcare?

    1. Mike says:

      American Corporatism.

  2. Matt says:

    The MUCH better question is why does the government carve out a monopoly for health care companies, and why don’t I reserve the choice of insurance providers instead of my company.

    The issue isn’t the health care providers profit motive, in fact that profit motive is what drives health care improvement, why do foreign leaders always come to the Mayo clinic for health care?

    We need to get government further out of the health care business.

    1. Allow it to be purchased across state lines
    2. Give citizens the tax breaks not corporations
    3. Remove the ridiculous state mandates that drive up costs
    4. Re-work medicare to be a voucher for insurance, not a voucher for a service.

    1. albert says:

      Congratulations! You managed to cram every Reflublican and insurance industry talking point into a single post! You are one skilled political operative. Now you can invoice the insurance lobby and move on to the next issue. Perhaps advocacy of drum magazines for handguns?

      1. Matt says:

        I greatly appreciate the compliment, but I am far from agreeing with the Republican party, in fact I am much more in line with a Libertarian party stance. As for insurance companies, I doubt highly they would be on board with my post because it woudl inspire compitiation which would weed out the “loosers”
        and cut profit margins because of competition. Why do you think the insurance companies support Obamacare?

        BUT… If you want to play that game let me go ahead and take a shot…

        Just like a liberal to rip on an idea without providing any context at all as to why it’s inaccurate or a better solution to the problem?

        What do you have Albert?

      2. Albert says:

        I posted something by seems to have swallowed it. Hopefully it will pop up or I’ll recreate it.

  3. dunnski57 says:


    You have 8 approved carriers in Minnesota. They must abide by rules set by the legislature for fair treatment and due process. Were you to buy insurance from Mutual of Albuquerque, you would have little recourse if you were denied coverage for ANY reason.

    I agree with your #2

    #3 hold insurers and medical providers to a standard. Want to bet that Minnesota’s standards are more favorable to the patient than Texas?

    Not familiar enough to comment on #4

  4. Matt says:

    What’s funny is the assumption that I need the state of Minnesota to represent me with a corporation. If in your example I purchased insurance through Mutual of Albuquerque I assume there would be a contract in place stating how and why they could drop me “for any reason.” If there wasn’t a contact in place I wouldn’t sign up.

    Let me give you a MUCH better example. Progressive insurance is the fastest growing auto insurance company in the United States mostly because of their direct to consumer no-nonsense low cost coverage. However, they are also one of the highest rated insurance companies for coverage, if they weren’t then people wouldn’t be switching over to them. What I’m saying is that in a free market if one insurance company decided to just drop customers or not reimburse claims, the individuals would change companies and the market would correct.

    That goes for age requirements and ailments that are covered, if there’s demand for those services then companies are going to provide them, we don’t need to have it legislated.

    So, if Minnesota wants to have laws that require certain mandates within the state that’s fine, but let me purchase my insurance from a state that requires personal responsibility in knowing my service in exchange for lower costs and better service.

  5. dunnski57 says:

    I guess that I just have a problem with a person’s health and health care being a profit and loss decision of a corporation.

    Just doesn’t seem right.

  6. dunnski57 says:


    found this on line. thought you might be interested:

    So what does selling coverage across state lines actually mean? Simply that an insurer could sell their product to any person in any state. Theoretically, this would mean consumers have a much greater range of insurers from which to choose, meaning increased competition and lower premium costs. However, there are some wider implications.

    The fact is, such a change may end up benefiting only those who are young, fit, and healthy – people who are low-risk in the eyes of insurers, and who can have their pick of policies. Anyone who is moderate or high risk will eventually find that getting affordable insurance, or perhaps even any insurance at all, becomes much harder.

    This may seem counter-intuitive. After all, surely opening up the market will mean everyone has a better shot at getting affordable insurance. The problem is, however, to an insurance company risk is still risk. The perceived risk of an individual who is fifty years old, overweight, and a smoker won’t decrease just because that individual can buy insurance anywhere in the country.

    And if an insurance company can offer cheap premiums to entice low-risk people from all over the country, they’re that much less likely to continue offering any type of insurance to higher-risk individuals.

    What this means is, it’s more likely that insurers will be encouraged to underwrite more and more aggressively, with cheaper premiums for those who qualify as low-risk. But those cheaper policies will provide increasingly skimpy coverage, meaning that people who prefer more comprehensive policies – as well as high-risk individuals – will find fewer companies are willing to offer the insurance they need.

    Does this mean across-state-lines insurance can’t work? Not necessarily, but more thought is needed to produce a workable solution. Federal regulation of insurance companies might be a good start – and in fact, if insurance companies are allowed to sell across state lines, this might seem to be the most appropriate and logical solution.

    1. Matt says:

      dunnski57, I appreciate the debatet.

      First, at least your honest that you don’t like your health care coming down to a profit and loss for a corporation, but that happens everyday with hospitals, but no one talks about that issue. Insurance companies are just paying the bills, hospitals are the ones doing the work.

      Second as far as pricing across state lines, that article is 100% accurate and likely most peoples issue with major insurance reform in the first place, which is pricing risk.

      In a free market someone with a higher risk will and should pay more. Going back to car insurance if someone has been in a number of accidents they are going to pay more for car insurance than a safe driver, so why shouldn’t health insurance be the same way?

      That gets a bit touchy with some people, but there are ways around it, here are a couple ideas.

      1. Longer term contracts, so someone signs up when they are young and healthy for a fixed term contract (like life insurance) and their cost structure stays the same where as the expenses to the insurance company are likely to go up over time.

      2. Co-insurance so when someone is young and getting cheap insurance they put a little money aside in an interest bearing account for when they are older and health insurance costs start to increase.

      The great part is that the market will find a way to correct, the downside is those with no personal responsibility could get left out in the cold, which is what got us into this mess and a number of other messes.

  7. Albert says:

    However, Matt, the market has FAILED to correct in huge ways before (Great Depression, Great Recession), and we are talking LIVES here. Your analysis belittles the underlying risk. It is not satisfaction with how your car gets fixed, it is human life. Government has a responsibility to regulate when the stakes are so high. Even you example of profits of hospitals does not mention a key element – they are regulated as to what they can do to maximize profits. They cannot dump an indigent gunshot victim onto the street. Business logic of the market requires them to do so. Social acceptability requires that they do not. I personally am not willing to let that be decided by a board of directors.

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