- Summary: Aetna Inc. (AET) reported trouble for the second straight quarter in raising premiums quickly enough to keep up with rising medical costs. The disclosure surprised investors and sent the company's stock tumbling 17%. Investors are concerned that increased competition for health-plan enrollment is causing Aetna and other insurers to bid too low for new business, eroding their profit margins. Three months earlier, Aetna's stock fell 20% on similar fears after its first-quarter earnings were announced. Aetna said net income slipped 1.4% from the year-earlier period to 67 cents a share. The latest results included a debt-refinancing charge and the write-off of an insurance recoverable related to a prior-year legal settlement. The drop in earnings came despite an increase in revenue, which rose 14% to $6.26 billion. Shares of other managed-care companies moved lower as well, with UnitedHealth Group (UNH) down 2.1% and Cigna Corp. (CI) sliding 8.4%. Cigna reports its second quarter on Wednesday; UnitedHealth reported higher quarterly profits last week.
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