- Aetna reported Tuesday its second quarter net profits were $2.08 per share, compared to $1.52 per share for Q2 last year.
- Analysts had expected a profit of $1.82 a share.
- The insurance giant cited relatively moderate medical costs as a major earnings factor.
An odd reality of the health insurance business is that when the economy struggles, insurers benefit (at least in the short term) because people reduce their use of healthcare services. But that particular business advantage is going away now as the economy continues to improve, and it's one reason why many big insurers -- including Aetna -- are trying to buy competitors and create massive economies of scale.
Aetna said its benefit ratio in its Medicare/Medicaid business had dropped to 80.3% from 86.5% a year earlier. Lower-than-expected costs and higher premiums helped generate the result, and insurer's net profit was nearly $732 million for the quarter.