UPDATE: WellPoint shares up, profit down-WEB ONLY

 WellPoint shares surged after it reported fourth-quarter earnings that were battered by investment losses and job cuts.

Shares of the Indianapolis-based health insurer closed at $44.50 today, up more than 4 percent on the day. The broader markets also rose on President Barack Obama’s plan to create a so-called “bad bank” to remove toxic mortgage assets from the books of financial companies.

WellPoint’s fourth-quarter profit fell 61 percent from a year ago because of $351 million in investment losses and a $24 million charge because of 600 layoffs this month.

Without those charges, WellPoint would have earned $1.39 per share, topping analysts’ estimates of $1.36 per share, according to a survey by Thomson Financial. A year ago, WellPoint earned $1.51 per share.

While investors bid up the shares, at least one analyst took a dim view of WellPoint’s news. “It’s cheap and beaten up,” Matt Perry, an analyst with Wachovia Securities, told Bloomberg News. “I don’t think it takes much to make these stocks go up now.”

The outlook for WellPoint’s business is still dark. CEO Angela Braly said the company expects unemployment in the states it serves to average 10 percent this year, even though the national unemployment rate was just 7.2 percent in December.

“Economic conditions will continue to deteriorate, and unemployment will continue to increase,” Braly told analysts during a conference call. “This will impact commercial membership in 2009.”

Commercial, or employer-based, insurance is WellPoint’s most profitable segment. Already, the company lost 148,000 commercial customers in its fourth quarter as large employers laid off workers. Revenue for the quarter fell 3 percent, to $15.1 billion, below analysts’ estimates of $15.6 billion.

“They were off on everything,” including enrollment, medical costs and administrative expenses, Aaron Vaughn, an analyst with Edward Jones & Co., told Bloomberg News. “It’s kind of like a death by 1,000 cuts.”

WellPoint did not give a forecast for its 2009 profits or customer rolls, other than to say it expected earnings per share to grow in the “low single digits.” Company officials will provide more details during an investors’ meeting on Feb. 24.

WellPoint is the nation’s second-largest health insurer by revenue, behind Minnesota-based UnitedHealth Group, but insures the most people. Its customers totaled 35 million at the end of 2008.

WellPoint also lost 140,000 non-commercial customers in its fourth quarter. For the year, however, it gained 240,000 customers.

For the year, WellPoint pulled in profit of $2.5 billion. Excluding investment losses and one-time items, the company would have earned nearly $2.9 billion in profit, down 14 percent from its 2007 profit. Revenue for 2008 totaled $61.3 billion, up 2.2 percent over the previous year.

The company’s stock lost 52 percent of its value in 2008 and had been flat so far this year.