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Aetna profit up 33% in quarter

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Aetna Inc. posted strong second-quarter results Tuesday driven by the performance of its government business, increased medical membership and an increase in premium revenue.

Hartford, Connecticut-based Aetna, which agreed in July to purchase rival insurer Humana Inc., reported net income of $731.8 million for the second quarter of 2015, up 33.3% from the year-ago period. The health insurer increased its total revenue from the previous year by 5% to $15.24 billion.

Revenue from premiums reached $12.94 billion, up 4.2% from the prior-year period, the insurer said.

Total medical benefit ratio was 81.1%, improved from 83.1% in the year-ago period, Aetna said.

For the first half of the year, net income was $1.51 billion, up 0.1% from the year-ago period; revenue was $30.34 billion, an increase of 6.4%; and revenue from premiums was $25.88 billion, up 6.4%, Aetna reported.

Aetna’s results were driven by a “standout quarter” for its government business, which increased membership by 66,000 in its Medicare and Medicaid segments, Aetna CEO Mark Bertolini said during a conference call Tuesday with investors.

Growth in Medicare and Medicaid offset declines in membership of Aetna’s small-group and middle-market commercial insured business, he said.

Membership in the commercial business declined by 61,000 members over the quarter, Shawn Guertin, Aetna’s executive vice president and CEO, said during the conference call.

Aetna acquisition

During the conference call, Mr. Bertolini also addressed the planned Humana purchase, expected to close in the second half of 2016. The acquisition, he said, will “create strong membership positions across multiple lines of business” and, specifically, “accelerate our ability to grow in Medicare Advantage.”

He said the combination of Aetna and Humana will service 4.4 million Medicare Advantage members and represent 8% of today’s 54 million Medicare beneficiaries, while expanding the combined businesses’ geographic footprint to cover 90% of the Medicare eligible population.

Finally, he said Aetna has already begun making federal and state regulatory filings, and is now “engaged in conversations with insurance commissioners, with governors, (and) with Washington” concerning its regulatory approach. Mr. Bertolini assured investors there will be “plenty of competitors” in each Medicare market following the acquisition, adding that the “bigger issue” is the “level of market share that the Blues hold.”