Aetna Profit Soars on Cost Cutting

Aetna Inc. posted second-quarter results well beyond analysts’ expectations as the health insurer curbed rising costs and dropped customers who were the most costly to insure. The company also raised earnings estimates for 2002.

Net income was $108.2 million, or 70 cents a share, including investment gains and a benefit for overestimating prior medical costs, up from $10.6 million, or 7 cents, a year earlier.

Operating profit, which excludes all one-time items, was $49.3 million, or 32 cents a share, for the quarter that ended June 30, beating the 25-cent average estimate of analysts surveyed by Thomson First Call.

Revenue fell 23% to $5.06 billion as membership in health plans declined.

Aetna benefited from payroll cuts, higher premiums and the shedding of unprofitable plans, including its government Medicare business, as well as from forging better deals with hospitals. The company announced in December that it would cut 6,000 jobs, or 16% of its work force.

Shares of the Hartford, Conn.-based company fell 58 cents to $43.10 on the NYSE.