Health insurer earnings: 7 takeaways

Aetna Inc. (NYSE:AET) — an insurer that’s been working with commercial agents and brokers since Abraham Lincoln was a trial lawyer — today reported that its third-quarter earnings were fine, but that it’s starting to like the idea of getting cash from the new federal “three R’s” 

Centene Corp. (NYSE:CNC) — an insurer that’s much more familiar to state government Medicaid program managers than to insurance producers — also reported third-quarter earnings.

Marsh & McLennan Companies Inc. (NYSE:MMC), a big commercial broker, also came out with earnings. Just as executives from Aetna and Centene talked during conference calls with analysts about their views on the new Patient Protection and Affordable Care Act (PPACA) public exchange system, Marsh executives talked during their company’s analyst call about the performance of their private exchange program.

Why should you, an insurance producer, care about the earnings reports?

Because the companies may be giving clues in the earnings releases and conference calls about where their health insurance operations may be heading — and where Wall Street investors might make the companies head, whether company executives want to move in that direction or not.

Here are six possible takeaways from morning’s batch of earnings reports and calls.

1. Commercial health insurance companies are sticking around

Aetna reported $595 million in net income for the quarter on $15 billiion in revenue, up from $519 million in net income on $13 billion in revenue for the third quarter of 2013.

The company ended the quarter providing or administering health coverage for 24 million people, up from 22 million people a year earlier, and enrollment grew in every enrollee category, including the commercial plan category.

Centene — a major player in the government plan market that now sells commercial qualified health plans (QHPs) through the PPACA exchanges in Arkansas, Florida, Georgia, Indiana, Massachusetts, Mississippi, Ohio, Texas and Washington state — is reporting $79 million in net income for the latest quarter on $4.4 billion in revenue, up from $49 million in net income on $2.7 billion in revenue for the comparable quarter in 2013.

Aetna says it has about 600,000 QHP enrollees, and Centene says it has about 76,000.

Neither company is saying anything about any major changes in its health insurance operations.

2. The insurers are still not sure what to say about the overall performance of the PPACA public exchanges

Neither Aetna nor Centene has published detailed figures on the performance of PPACA-compliant major medical coverage, PPACA-compliant individual coverage, or exchange QHP business.

During Aetna’s call, Aetna Chairman Mark Bertolini described the exchange QHP block as producing a “modest loss year-to-date” but starting to make a “modest amount of money.”