Health insurer Amerigroup Corp cut its third-quarter earnings outlook, citing elevated medical costs tied to the onset of a severe flu season due to the H1N1 virus, and withdrew its full-year outlook.

The company now expects to earn 42 cents to 44 cents a share in the third quarter. Analysts expected the company to post a profit of 57 cents a share, according to Thomson Reuters I/B/E/S.

The vast majority of our members are within the demographic most at risk for the flu and we appear to be early in the cycle. With this in mind, it is difficult to determine if, and when, the situation will abate, continue at current trends or worsen, Chief Executive James Carlson said in a statement.

Amerigroup, which had cut its 2009 earnings outlook twice in the year, withdrew the per-share earnings forecast of $2.55 to $2.75, saying it may not meet the view due to the wide range of medical cost outcomes that may occur in the fourth quarter.

The company said medical costs incurred in the quarter will be above its expectations, due to a significant spike in flu-related activity that is most pronounced in September.

Shares of the company closed at $22.59 Friday on the New York Stock Exchange. (Reporting by Archana Shankar in Bangalore; Editing by Ratul Ray Chaudhuri)

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