Health insurer UnitedHealth Group Inc posted better-than-expected quarterly profit on Thursday, helped by moderating flu costs and growth in its businesses serving the elderly and low-income Americans, and its shares rose 3.6 percent.

The largest health insurer by market value also backed its 2010 forecast.

UnitedHealth is the sector bellwether and the first to report earnings and these results bode well for the managed care earnings season, Goldman Sachs analyst Matthew Borsch said in a research note.

Shares of UnitedHealth and rivals have soared in recent months as fears over a U.S. health system overhaul that would dramatically threaten profits have subsided.

Still, Tuesday's stunning election of a Republican to the U.S. Senate by voters in Massachusetts has thrown the reform process into uncertainty, leaving the companies' near-term share performance tied to reform-related developments.

UnitedHealth's fourth-quarter net income rose 30 percent to $944 million, or 81 cents per share, from $726 million, or 60 cents per share, a year earlier, when the company took a big litigation charge.

Analysts on average expected 73 cents per share, according to Thomson Reuters I/B/E/S.

Revenue rose 6.5 percent to $21.78 billion. Analysts looked for $21.72 billion.

Strong and clean quarter on all counts supporting our conviction that this management team has got a handle on its operations and is set to reap the benefits of this turnaround into 2010, Sanford Bernstein analyst Ana Gupte said in a research note.

The company spent more premium revenue on medical costs -- 81.3 percent vs. 80.8 percent a year earlier -- but that ratio was better than company expectations. It said the intensity of the H1N1 outbreak, a cost issue cited by UnitedHealth last year, subsided during the quarter.

Its unit for Medicare plans serving the elderly saw revenue growth of 14 percent to $7.8 billion, while its unit for Medicaid plans for low-income Americans grew 34 percent to $2.3 billion. Enrollment rose in both businesses.

Like rivals, UnitedHealth is being hurt by the weak economy, because fewer people employed means fewer with health coverage.

For its UnitedHealthcare plans serving employers, the company reported a decline of 130,000 members from the end of the third quarter, to 24.63 million, but said the plans would have seen growth of 40,000 members if not for job cuts at continuing clients.

Total membership stood at 32 million at the end of December.

UnitedHealth continues to project 2010 profit of $2.90 to $3.10 per share, down from $3.24 reported for 2009. Analysts expect $3.06 for 2010.

The prospect for broad U.S. health reform that would dramatically affect UnitedHealth and other insurers suddenly became uncertain with Tuesday's election. The victory by Republican Scott Brown robbed Democrats of the supermajority potentially needed to secure passage of sweeping legislation.

Though Wall Street viewed the development as largely positive for the health insurers, near-term stock gains may be capped by uncertainty over the next steps for reform and the group's recent strong run.

Shares rose $1.25 to $35.80 in premarket trading. UnitedHealth shares have risen 38 percent since October, slightly ahead of the rise for the S&P Managed Health Care index <.GSPHMO> of large health insurers, as investors gained confidence that reforms would not be as severe on industry profits as initially feared.

(Reporting by Lewis Krauskopf; Editing by Lisa Von Ahn, Derek Caney, Dave Zimmerman)