WellPoint CEO Works To Curb Drop in Stock Price With Premium Increases
WellPoint CEO Angela Braly "is attempting a delicate balancing act" of increasing premiums to address investors concerns about the share price without pushing members to drop their coverage, Wall Street Journal reports.
According to the Journal, the health insurance industry overall is dealing with the same challenge, although it is more substantial at WellPoint, which covers 35 million people in 14 states.
Braly, who became WellPoint CEO last June, has "tried to reverse a margin decline that has pushed its stock down nearly 40% this year," but "her actions, thus far, have irritated some customers more than they pleased investors," the Journal reports.
Earnings for WellPoint have decreased by 17.3% this year. In response, WellPoint in March began to increase premiums, a move that contributed to the loss of 189,000 members in the first six months of 2008 and the expected loss of an additional 150,000 members by December.
WellPoint officials have said that the company has sought to retain more profitable business and that the members who have left tend to cost more.
However, "some analysts believe that continued customer losses risk putting WellPoint in an unflattering light," and, during "an election season that features new calls to overhaul health care, the company's efforts to fix its earnings drop by raising premiums could make it a target," according to the Journal (Fuhrmans, Wall Street Journal, 9/3).