Income growth of the insurer, the cost control Help Profits

 

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Copyright 2009 Landmark Communications, Inc.All Rights Reserved The Virginian-Pilot (Norfolk, VA.)

Friday 20 February 2009 The Virginian-Pilot Edition

SECTION: FRONT; Pg A13

LENGTH: 474 words


TITLE: The insurer's revenue growth, cost control helps increase profits by 20%

Signature: TOM SHEAN



By Tom Shean

The Virginian-Pilot

Virginia Beach

Amerigroup Corp. said Thursday that its fourth quarter net income climbed 20 percent partly due to the growth of its premium income and a better control of medical costs.

Virginia Beach-based health insurer, which specializes in managing care for the beneficiaries of programs funded by the government, also said it expects to benefit this year from the increased federal funding for Medicaid and the recent legislation extending the State Children's Health Insurance Program.

However, the company has not yet taken into account the impact of increased spending on its 2009 earnings because it is difficult to predict at what pace will be able to extend these programs, said James G. Carlson, Amerigroup President and CEO, during a conference call with analysts.

Net earnings for the October-through-December quarter totaled $ 37.4 million compared to $ 31.1 million during the prior year quarter. Earnings per share amounted to 70 cents against 57 cents.

Its fourth quarter increased, despite the sharp drop in interest rates and a fall of 46 per cent of its income from investments, said James W. Truess, Amerigroup's chief financial officer, during the conference call. The profit contribution from investment income remain low again this year, he predicted.

Its revenues for the quarter rose 9 percent to $ 1.17 billion partly because of rate increases in Georgia and Texas during the quarter, the company's expansion in New Mexico .

He also benefited from better control health care costs, especially in the middle Tennessee market. He said that its health benefits ratio, the percentage of the premium goes to pay for medical expenses, plunged in the last quarter to 81.4 percent from nearly 83 percent in the last quarter of 2007 .

For all of 2008, Amerigroup reported a loss of $ 50.7 million, or 96 cents per share, citing the impact of one time of $ 234.2 million in the second quarter to settle a "whistle-blower" to the federal appeals court in Chicago. Without this, he would have earned $ 149 million, or $ 2.77 per share in 2008, Amerigroup said. In 2007, the company earned $ 116.5 million, or $ 2.16 per share.

Turnover for 2008 rose nearly 15 percent to $ 4.52 billion.

The number of persons covered by Amerigroup's health plans at the end of December fell by nearly 8 percent to 1.58 million from the end of 2007, mainly due to his departure from the West Tennessee and Washington, DC, during 2008.

In its guidance to investors, Amerigroup said it continues to expect to earn between $ 2.50 and $ 2.65 per share this year.

Tom Shean, (757) 446-2379, tom.shean @ pilotonline.com share price

Amerigroup Corp. 's share price rose $ 1.44, or 5 percent, in heavy trading Thursday on the New York Stock Exchange close of $ 30.13.

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