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Aetna Shares Decline After Profit Report

Shares of Aetna are in the red after the insurance company barely met profit expectations in the first quarter.

Shares of



were in the red Wednesday morning after the insurance company barely met profit expectations in the first quarter.

Earnings during the quarter inked a 1% increase to $438 million, or 95 cents a share, compared with $432 million, or 85 cents, in the year-ago period.

Excluding one-time items the company would have earned 94 cents, meeting analysts' outlook.

The company said it received a boost from an uptick in membership levels and premium rate increase.

"We did, however, incur higher-than-projected medical costs in our commercial products," Ronald Williams, chief executive, said in a statement. "We believe we are experiencing two impacts from the recessionary economy: first, the impact of layoffs and increased Cobra membership and second, a higher intensity of facility services."

A new federal subsidy that pays 65% of the cost of COBRA coverage for people who get laid off began late in the quarter, but it's unclear whether it had an effect.

Revenue inclined 11% to $8.62 billion. The company reaffirmed guidance of $3.85 to $3.95 a share.

Shares of the company sank 7% to $22.49 in morning trading.

"While Aetna continues to execute well, the company's (first-quarter) results are the weakest in the industry thus far," Wachovia analyst Matt Perry said in a research note.

According to an April 16 article on, there has been speculation that

Aetna is interested in purchasing rival



for as much as $32 a share.

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