Shares of insurance giant WellPoint Inc. and its major rivals fell after President Obama won reelection and his landmark healthcare law cleared a major hurdle to full implementation.
WellPoint, the nation's second-largest health insurer, reported a 1% increase in third-quarter profit Wednesday, topping Wall Street expectations. But its shares tumbled $3.23, or 5.3%, to $57.97 in midday trading Wednesday.
Other insurers slipped as well. Shares of UnitedHealth Group Inc. and Aetna Inc. both declined by about 4% in midday trading.
In contrast, shares of major hospital companies rallied on the premise they will get more insured patients under the healthcare expansion.
Some analysts said the sell-off in the insurance sector was overdone and they recommended that investors buy shares on the weakness. The Affordable Care Act will bring as many as 30 million more Americans into the private-insurance market and state Medicaid programs, which many insurers contract with to provide managed-care plans.
But the federal overhaul also imposes new rules on health insurers, such as forcing them to accept applicants with preexisting medical conditions starting in 2014 and requiring them to spend a minimum amount of premiums on medical care.
WellPoint said its net income for the quarter ended Sept. 30 was $691.2 million, or $2.15 a share, compared with $683.2 million, or $1.90 a share, a year earlier. Revenue in the quarter was essentially flat from a year ago at $15.35 billion.
Its overall enrollment dipped 2.5% to 33.5 million members, hurt by a continued loss of business customers. The company's Medicare and Medicaid enrollment kept climbing.
WellPoint, which runs Anthem Blue Cross in California and health plans in 13 other states, continues to search for a new chief executive after Angela Braly stepped down in August under pressure from shareholders about the company's lackluster performance and lagging stock price.
ALSO:
Health insurers line up to compete in California's exchange
WellPoint CEO Angela Braly quits, bowing to investor pressure
Blue Shield's union ties raise concerns about conflicts in public contracts
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Shares of WellPoint, other health insurers drop on Obama win
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