Amerigroup 3Q profit up on greater premium revenue

Health insurer Amerigroup Corp. said Wednesday its third-quarter profit rose 26 percent as premium revenue increased and the company was able to spend less on providing benefits.

The company's profit increased to $39.4 million, or 74 cents per share, from a year-ago total of $31.2 million, or 58 cents per share. Revenue grew to $1.12 billion from $1.03 billion, a gain of 9 percent. Premium revenue rose 9 percent to $1.11 billion, and investment and other income dipped slightly.

On average, analysts expected 51 cents per share in profit on $1.13 billion in revenue, according to Thomson Financial.

Amerigroup said its health benefits ratio for the quarter fell to 80.1 percent, down from 82.9 percent a year earlier, and 82 percent in the second quarter of 2008. That ratio shows what portion of the company's premium dollars were paid out to provide medical care.

The company said most of its health plans did better than expected, and favorable reserve developments also improved the results.

Membership increased to 1.7 million from 1.5 million, or about 12 percent. Approximately 1.4 million of those people are Medicaid recipients. Others get their benefits through a state children's health care program or Medicare Advantage.

The company raised its adjusted 2008 forecast and issued a 2009 outlook. Its profit is above analyst expectations, but the revenue forecast was below estimates.

In aftermarket trading, the stock rose 83 percent, or 4.7 percent, to $18.65. Shares closed at $17.82 Wednesday.