Shares of Aetna ( AET) 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 Thestreet.com, there has been speculation that Aetna is interested in purchasing rival Cigna ( CI) for as much as $32 a share.

Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.

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