NEW YORK (Reuters)—Health insurer Aetna Inc. posted an 18% increase in third-quarter net income on better returns from its investments, but projected full-year profit would come in at the low end of its previous view.

The No. 3 U.S. health insurer's quarterly profit beat analyst expectations, but it reported higher-than-expected medical cost trends for plans serving employers, mainly due to expenses tied to the H1N1 flu and COBRA insurance for Americans who lost their jobs.

Goldman Sachs analyst Matthew Borsch called the quarter a "mixed bag" with the earnings beat countered by the increase in medical cost trends and an implied weak fourth quarter.

Net income rose to $326.2 million, or 73 cents per share, from $277.3 million, or 58 cents per share, a year earlier, when Aetna realized huge investment losses stemming from the credit crisis.

Excluding items, earnings of 69 cents per share were 3 cents ahead of the analysts' average estimate, according to Thomson Reuters I/B/E/S.

Revenue rose 14% to $8.72 billion.

Aetna follows large insurers WellPoint Inc. and UnitedHealth Group Inc. in posting a better-than-expected third-quarter profit.

But shares of U.S. health insurers are trading at rock-bottom valuations over concerns a health system overhaul under debate in Congress will dramatically undercut their business.

Aetna's enrollment stood at 19.03 million at the end of September, up 8% from a year ago, but down slightly from the end of June.

In its commercial plans, the company spent 85.6% of its premium revenue on medical costs, compared with 80.3% a year earlier. Aetna had targeted a range of 84% to 85% for the second half of 2009.

Flu and COBRA expenses also led rival insurer WellPoint on Wednesday to project higher medical expenses for the year.

Aetna forecast full-year operating earnings of $2.75 per share. In July, it forecast a range of $2.75 to $2.90. Analysts looked for $2.86.

The company had already lowered its 2009 outlook twice during the year, citing higher-than-projected medical costs.