Analysts on the call hammered away at the insurer's pricing strategy and claims payouts. Braly's efforts to attribute the decline to market challenges seemed particularly lame. Yes, the job market is weak, which affects membership, and there's increased competition for a piece of the shrinking commercial market, but under similar market conditions, its chief competitor, UnitedHealth, beat analyst projections in the second quarter 2012 and reported a 5.5% profit increase.
Industry profits were less than sterling overall. Four of the five major health insurers posted a drop in second quarter profits. While Aetna and Cigna did better than expected, Humana and WellPoint did worse, but only WellPoint garnered a negative forecast from analyst.
Within days the investment community was suggesting that WellPoint didn't have a market problem as much as it had a management problem. Actually, there has been a drumbeat of opposition to Braly for several years. The second quarter results just seemed to energize that effort.
The WellPoint board issued statements of support for Braly, but investment fund and hedge fund managers, including New York-based Royal Capital Management began making public their opposition to Braly's management.