Health insurer Aetna Inc. gained more than 1 million new members in the first quarter and reported a modest profit increase.
But higher-than-expected medical costs, a problem many insurers wrestled with last year, cast a shadow over the performance.
Hartford, Conn.-based Aetna said it adjusted its pricing to accommodate medical costs that rose 14% compared with the same quarter in 2008.
Company officials tied the increases largely to factors found in the slumping economy. They said employees of companies cutting jobs or trimming benefits tend to use those benefits more in case they lose them.
Aetna also saw an increase in people continuing their coverage under the federal law commonly known as COBRA, which helps people who lose their jobs keep temporary health benefits from their former employer.
Aetna shares fell more than 10%, or $2.52, to close at $21.88 on Wednesday.
Aetna became the fifth large health insurer to surpass Wall Street expectations for the quarter.
But Wachovia analyst Matt Perry said in a separate note that Aetna’s results were the “weakest in the industry thus far.”
Aetna said its profit rose 1% to $437.8 million, or 95 cents a share, compared with $431.6 million, or 85 cents a share, in the same quarter last year.
Revenue, which excludes investment losses, rose 11% to $8.6 billion.