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UPDATE 3-Health insurer Anthem signals smaller pandemic hit next year

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(Adds company comments, updates shares, rewrites throughout)

By Manojna Maddipatla and Leroy Leo

Oct 20 (Reuters) - Anthem Inc on Wednesday raised its full-year profit outlook for the third time this year and forecast less of a drag on earnings from COVID-19 next year as infections drop, sending the U.S. health insurer's shares to a record high.

The comments from Anthem echoed larger rival UnitedHealth Group Inc and allayed some concerns the recent surge in U.S. COVID-19 cases linked to the Delta variant would boost health insurance companies' medical costs.

Such costs have been in flux since the coronavirus outbreak, with less spending due to delays in elective procedures being offset by a jump in direct COVID-19 treatment and testing costs.

Anthem, like UnitedHealth, raised its 2021 profit forecast after beating third-quarter profit estimates on the back of lower-than-expected medical costs.

UnitedHealth also said last week it expected the pandemic to have a smaller impact on its profit next year as infections decline and more people get vaccinated.

Anthem, however, said higher testing and vaccinations will probably keep medical costs above usual levels throughout the fourth quarter.

"The Delta variant is still out there, and we want to be very respectful for it as well as any other new variants that may or may not exist," Chief Financial Officer John Gallina said.

The comments come as the United States is on the verge of authorizing booster vaccine shots from Moderna and Johnson & Johnson.

The number two U.S. health insurer said it now expected this year's adjusted profit to exceed $25.85 per share, up from an earlier forecast of more than $25.50.

Stephens analyst Scott Fidel said Anthem and UnitedHealth's expectations were "reasonable given where we are right now with vaccinations entering into 2022."

Anthem shares were up nearly 7% at $422.72 in late morning trade. (Reporting by Leroy Leo and Manojna Maddipatla in Bengaluru; Editing by Ankur Banerjee and Tomasz Janowski)

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