Health Insurer

UnitedHealth cuts forecast, settles class-action suit

UnitedHealth Group Inc., the largest U.S. health insurer, cut its full-year earnings forecast and agreed to pay $895 million to settle a federal class-action lawsuit related to stock options given to company executives.

Full-year adjusted earnings per share are now expected to be $2.95 to $3.05, the Minnetonka, Minnesota-based company said in a Business Wire statement today.

In April, the insurer had cut the forecast to $3.55 to $3.60 a share because of declining sales. UnitedHealth said today that the competitive pressures continued to weigh on gross margins in the second quarter. The forecast doesn't include any impact from the litigation settlement, because the timing of the legal payment isn't known, UnitedHealth said.

The proposed settlement is subject to the approval of the insurer's board, as well as the board of lead plaintiff California Public Employee's Retirement System and the court.

(Published by Bloomberg - july 2, 2008)