New York, January 25 (FinanceEnquiry.com) - WellPoint Inc. (NYSE: WLP) posted 39 percent lower fourth-quarter earnings because of the increase in medical claims related to its Medicare Advantage business. The company earned $335.3 million or 96 cents per share in the fourth quarter, down from $548.8 million or $1.40 per share in the same period of 2010. WellPoint’s adjusted net income, excluding investment gains and losses, amounted to 99 cents per share.

Notwithstanding the lower earnings, which the company described as a rare miss of Wall Street expectations, it raised its quarterly dividend and forecast of earnings growth in 2012. Its stock plunged more than 6 percent or $4.40 to $65 in premarket trading on Wednesday. The operating revenue, excluding investment gains, rose 5.5 percent to $15.18 billion, against average analysts’ expectations of earnings of $1.12 per share on $15.46 in revenue.

The insurer attributed its drop in earnings to higher medical claims, tied to its Medicare Advantage coverage that jumped nearly 10 percent in the quarter to $12.43 billion, in comparison to a fall of 5 percent in the same quarter in 2010. WellPoint pointed out that adverse selection had hurt some of its plans last year as healthy members dropped coverage leaving behind large number of people, who have more claims than their contributions by way of premiums. WellPoint expects earnings of $7.60 per share in 2012 and it has increased its quarterly dividend from 25 cents per share to 28.7 cents.