UnitedHealth Group now largest U.S. health insurer - In the News - overtakes Aetna - Brief Article - Statistical Data Included

Healthcare Financial Management, April, 2002

UnitedHealth Group, Minneapolis, Minnesota, has overtaken Aetna Inc., Hartford, Connecticut, as the nation's largest health insurance provider in terms of enrollment. UnitedHealth Group's enrollment has grown for the past several consecutive years. The company had more than 16.5 million members as of December 31, 2001, and expects its 2002 enrollment to exceed 17 million. Aetna's enrollment dropped from 17.2 million in December 2000 to 1 5.6 million in December 2001.

UnitedHealth Group achieved record revenues and earnings in 2001, posting operating earnings of $1.57 billion for 2001, up 31 percent from the operating earnings of $1.2 billion posted in 2000. Revenues for 2001 were $23.5 billion, up 11 percent from $21.1 billion in 2000. The company's operating margin increased to 6.7 percent in 2001 from 5.7 percent in 2000.

Aetna expects its enrollment to continue to drop in 2002, reflecting the company's downsizing strategy. The company posted an operating loss of $34.6 million for the fourth quarter of 2001, compared with operating earnings of $28.7 million for the fourth quarter of 2000 and an operating loss of $49.3 million for the third quarter of 2001. Aetna's commercial HMO medical cost ratio (MCR) was 89.7 percent in the fourth quarter of 2001, compared with an MCR of 90.1 percent in the third quarter of 2001. Aetna posted an operating loss of $266.4 million for all of 2001, compared with operating earnings of $193.6 million for 2000. The company plans to raise premiums and drop unprofitable customers and health plan products in 2002 to position itself for profitability.

CIGNA Corporation, Philadelphia, Pennsylvania, which is ranked as the nation's third-largest health insurer with an enrollment of 14.3 million, faces a U.S. Department of Justice and HHS investigation into Medicare cost-reporting practices affecting a subsidiary's business for 1990 through 1999. The subsidiary, Lovelace Health Systems Inc., owns a health system in Albuquerque, New Mexico--the only U.S. health system owned by CIGNA and its subsidiaries. The Medicare services under investigation represent 2 to 6 percent of Lovelace's annual revenue. In 1999, this activity accounted for $10 million of Lovelace's annual revenue. CIGNA does not expect the investigation to result in losses that would be material to its consolidated results of operations, liquidity, or financial condition.