Before the opening bell, blue-chip health insurer WellPoint (NYSE:WLP) announced that its 2007 Q1 EPS increased 16% versus the year-ago quarter. The company's operating revenue grew nearly 9% from $13.6 billion to $14.8 billion. Both of these improvements were driven by membership growth and premium increases. Membership enrollment increased slightly by 2% versus the company's 2006 Q1.

Being the nation's largest health insurer and growing at the rate it has been in recent years, the waters are not always going to be smooth for sailing. It's worth noting the fact that WellPoint's benefit expense ratio increased from 81.3% in the year-ago quarter to 83.1% in the most recent quarter. Part of the increase is attributable to the seasonality of Medicare Part D, which has historically had a significantly higher expense ratio in the earlier part of the year and then trails off as the year progresses.

Management also noted "unacceptably high" benefit expense ratios in two states partaking in the company's state-sponsored claims segment, which drove the overall expense ratio in this segment up a troubling 630 basis points. To management's credit, they have worked toward, and are anticipating, rate increases in these geographical locations in the upcoming months to bring the benefits expense ratio back under control.

Despite these unfavorable trends, which pushed the company's stock price down by 4% in early morning trading, the big picture looks pretty sound at WellPoint. During the quarter, WellPoint repurchased 8.2 million shares of its common stock for $634.9 million. Its board also approved an additional $2 billion in share-repurchase authorization, bringing its total authorization for 2007 to $3 billion.

The large share-repurchase initiatives that the market has seen from WellPoint and some of the other large health insurers over recent quarters, such as those undertaken by Cigna (NYSE:CI), Aetna (NYSE:AET), and UnitedHealth Group (NYSE:UNH), are positive in terms of increasing shareholder value and lead me to conclude that these companies continue to hold the belief that their own stock prices remain at reasonable valuation levels. An added plus for WellPoint shareholders is the fact that the company now expects full-year net income growth of 15% over 2006 and continues to expect its Q2 net income to finish in line with its previously issued guidance.

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Fool contributor Billy Fisher has no financial interest in any stocks mentioned. The Fool has a disclosure policy.