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Kaiser profits more than double in first half


OAKLAND, Calif.--Kaiser Permanente reported significantly higher profits for the first half of 2007 due to a sizeable reduction in reserves for professional liability and workers compensation costs, and strong earnings from contract renewals.

Net income in the first half of 2007 for the Oakland, Calif.-based health care organization was $1.82 billion, up from $720 million during the same period last year.

First-half revenues rose to $18.1 billion, a 10% increase from the first half of 2006.

The strong earnings reflect a reduction in reserves for professional liability and workers compensation costs of $356 million, driven by favorable results for claims and workplace injuries as well as the impact of legislative reform in California, according to a statement. Higher earnings from contract renewals that went into effect in January also contributed to the strength of the insurer's earnings in the first half.

Investments in technology and workplace safety contributed to the company's ability to manage its costs and will help the insurer reduce the rate of premium increases for its customers, according to Kaiser officials.

The organization's costs, though, are expected to increase through the rest of the year so the first-half earnings are unlikely to be repeated, they said.

"Our second-quarter operating results are an anomaly and we do not expect this level of earnings to continue throughout the remainder of the year," said Kathy Lancaster, exec vp and chief financial officer.

Total medical membership as of June 30 remained stable at 8.7 million compared with 8.6 million last year.