PPACA Rebates Start to Affect Earnings

The past year was tricky because “we did not have detailed regulatory guidance on how the rebate pools would work until after the business was priced,” Zubretsky said.

Another factor is that utilization was lower than Aetna had expected.

Aetna expects to reduce large-group rebates in 2012 by adjusting pricing, and it expects to reduce individual products through its commission strategy, Zubretsky said.

Throughout the market, “we see the pricing environment as competitive but still rational,” Aetna Chairman Mark Bertolini said.

At the start of the call, Bertolini focused mainly on Aetna’s Medicare and Medicaid lines.

“We continue to believe [Medicaid] will be a growth engine for Aetna over time,” Bertolini said.

Assurant — a multi-line carrier — is reporting $76 million in net income for the third quarter on $2.1 billion in revenue, compared with $142 million in net income on $2.1 billion in revenue for the third quarter of 2010.

Assurant Health, the Assurant health insurance unit, is reporting $5.8 million in net operating income on $438 million in net earned premiums, fees and other revenue, compared with $5.3 million in operating income on $478 million in net earned premiums, fees and other revenue.

Excluding the effects of income tax calculations, the unit’s MLR rebate costs amounted to $9.3 million, Assurant says.

Another company, Symetra Financial Corp., Bellevue, Wash. (NYSE:SYA), is reporting $11 million in overall net income on $455 million in revenue, compared with $57 million in net income on $485 million in revenue for the third quarter of 2010.

Symetra sells stop-loss coverage — coverage that helps employers protect self-insured health plans against catastrophic losses. An acquisition of another company’s book of stop-loss business helped increase stop-loss revenue to $120 million, from $98 million. New stop-loss sales increased to $16 million, from $15 million.