INDIANAPOLIS - Health insurer WellPoint Inc.'s third-quarter profit fell 11 percent as enrollment in employer-sponsored health insurance plans continued to slip while more U.S. workers lost their jobs.

The largest publicly traded health insurer based on enrollment said Wednesday it took a big hit in its local group business, which provides fully insured plans for small businesses. Membership there sank 6 percent compared to the same quarter in 2008.

Enrollment in WellPoint's commercial business, a category that encompasses mostly employer-sponsored group coverage, dropped 3.5 percent. Total medical membership at quarter-end was 33.9 million, a decrease of 4.2 percent from the prior year.

"There has been a significant decline in literally the size of the pie," said Ken Goulet, chief executive of WellPoint's commercial business unit. "Our market share continues to stay stable or grow, meaning we're beating our competitors.

"However, the number of insured lives is going down as the recession drives layoffs in the commercial group of business."

The recession has hurt health insurers because employers have cut jobs and reduced the number of people covered by employer-sponsored group health insurance. Some companies, especially small businesses, have dropped health coverage entirely.

Employer-sponsored health coverage is "the bread and butter business" for insurers, BMO Capital Markets analyst Dave Shove said in a recent note. He said the business does not come with the risk of government intervention like reimbursement cuts.

WellPoint competitor UnitedHealth Group Inc. said last week its enrollment in plans sold to employers fell 6 percent for the second-straight quarter.

In the third quarter, WellPoint earned $730.2 million, or $1.53 per share. That's down from $820.7 million, or $1.60 per share, a year earlier.

The results include an impairment charge of 28 cents per share, partially offset by investment gains of 3 cents per share. Adjusted earnings were about $1.78 per share.

Total revenue, which includes investment income, rose 3 percent to $15.4 billion.

The performance trounced Wall Street expectations. Analysts surveyed by Thomson Reuters expected, on average, a profit of $1.37 per share on $15.15 billion in revenue. Analysts typically exclude one-time charges from their estimates.

"While the quarter was strong, the underlying results look mixed," Wells Fargo analyst Matt Perry said in a research note. "The pressure in commercial fully insured margins is more severe than we expected heading into 2010."

WellPoint's benefit expense ratio, an important statistic that shows the percentage of premiums used to pay claims, fell to 81.1 percent from 82.5 percent. The company also said its cash flow from operations of $3 billion in 2009 through September was strong.

For the full year, the company expects to earn $5.06 to $5.12 per share, including net investment losses of 52 cents per share and the third-quarter impairment charge of 28 cents per share.

The adjusted earnings forecast is $5.86 to $5.92 per share, up from a previous range of $5.60 to $5.66 per share.

Analysts expect WellPoint to post an annual profit of $5.67 per share.

WellPoint shares fell 20 cents to $46.50 in Wednesday morning trading.

The insurer operates Blue Cross Blue Shield plans in 14 states, including California, New York and Ohio.

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AP Business Writer Dorothea Degen contributed to this story from New York

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