Insurer UnitedHealth Group Inc posted a better-than-expected 15 percent rise in quarterly profit on Thursday, helped by its plans serving low-income and older Americans.

The company, the largest U.S. health insurer by market value, also relieved investors by reporting improvements in a key medical cost gauge.

But enthusiasm for the company's shares was tempered by a tepid forecast. UnitedHealth said fourth-quarter earnings would decline from the third quarter and its business serving large employers would suffer a drop in membership in January.

The company's shares have underperformed those of other health insurers this year and trade at a discount to the sector. The shares were little changed in morning trade.

They have a lot on their plate. There's a lot of risk in this guidance, CRT Capital analyst Sheryl Skolnick said. I would just suggest that the market be very cautious right now in approaching United.

Net earnings at UnitedHealth, the first U.S. health insurer to report third-quarter earnings, rose to $1.28 billion, or 95 cents per share, from $1.11 billion, or 80 cents per share, a year earlier. Analysts on average had expected 92 cents per share, according to Reuters Estimates.

Revenue rose 4 percent to to $18.68 billion.

Goldman Sachs analyst Matthew Borsch said strength in profit margins for its Medicare plans serving seniors and Medicaid plans serving low-income Americans helped drive the earnings surprise.

UnitedHealth has been battling concerns about its performance amid changes in its management ranks. Adding to recent executive departures, the company said on Thursday that Tracy Bahl, who has run its Uniprise business, is leaving.

Chief Executive Stephen Hemsley also said efforts to integrate large mergers and a recent stock-options scandal had distracted the company.

Much of that has been addressed, Hemsley said in a conference call with analysts. You don't really see the full impact of that until it really resonates in the market for some time.

UnitedHealth said its consolidated medical care ratio, a key measure of the percentage of premiums spent on medical costs, improved to 79.5 percent from 81.1 percent a year earlier, with stable or improved performance in every segment.

The ratio for UnitedHealthcare, a unit that serves mid-size and small businesses, came in at 81.6 percent, slightly better than some analysts had expected.

Revenue in its AmeriChoice unit for Medicaid plans rose 22 percent to $1.2 billion. For its Ovations unit for Americans older than 50, revenue rose 3 percent to $6.6 billion.

UnitedHealth provided full health benefits to 28.57 million members at the end of September, about 95,000 fewer than at the end of June but up 30,000 from a year earlier.

The company projected that membership in its Uniprise plans, which perform administrative services for large employers, would fall by 80,000 to 100,000 as of Jan. 1.

The Minneapolis-based company forecast 2007 earnings of $3.49 to $3.50 per share, excluding one-time items. Analysts' average forecast is $3.47. It said fourth-quarter earnings would be hurt by seasonal increases in health-care costs and higher Medicare marketing spending.

UnitedHealth offered a 2008 profit forecast for the first time, saying it was targeting earnings of $3.95 to $4 per share on revenue of $83 billion. It said share repurchases in the fourth quarter and 2008 would total $7 billion.

It repeated its forecast that the acquisition of Sierra Health Services Inc (SIE.N: Quote, Profile, Research), which is pending, would boost earnings by 4 cents per share next year.

Analysts expect 2008 profit of $3.92 per share, according to Reuters Estimates. That estimate excludes any contribution from Sierra.

UnitedHealth forecast long-term earnings per share growth of 13 percent to 16 percent a year.

Shares of UnitedHealth were down 16 cents to $48.44 in midday trade on the New York Stock Exchange. The shares are down about 9 percent this year, compared with a 10 percent rise for the Morgan Stanley Healthcare Payor index, a broad gauge of health-insurer stocks.