Cigna 1Q earnings fall 10 pct, 2012 forecast rises
BLOOMFIELD, Conn. (AP) — Cigna Corp.'s first quarter earnings dropped 10 percent, as the health insurer took a $28-million, after-tax charge tied to its acquisition of fellow insurer HealthSpring Inc., which closed early in the quarter.
The Bloomfield, Conn., company also recorded a $13-million after-tax litigation charge and absorbed an $11 million loss from one of its discontinued businesses, but nevertheless raised its 2012 earnings forecast.
All told, the insurer earned $371 million, or $1.28 per share, in the three months that ended March 31. That compares with net income of $413 million, or $1.51 per share, in last year's first quarter, when Cigna also recorded a $24-million gain from the completion of an Internal Revenue Service examination.
Revenue climbed 25 percent to $6.79 billion in the 2012 quarter.
Analysts expected, on average, earnings of $1.30 per share, on $6.59 billion in revenue, according to data provider FactSet.
Cigna is the fourth-largest commercial health insurer based on enrollment, trailing WellPoint Inc., UnitedHealth Group Inc. and Aetna Inc. It operates health care, group disability and life segments in the U.S. The insurer also has an international segment that sells individual insurance in several countries and operates an expatriate business that covers people living outside their home countries.
Cigna's premiums and fees jumped about 36 percent in the first quarter, due to the company's $3.8 billion acquisition of Nashville, Tenn.-based HealthSpring. That deal helped Cigna gain a bigger stake in the fast-growing market for Medicare Advantage plans, which are privately run versions of the government's Medicare insurance program for the elderly and disabled.
Revenue from the company's international segment, which Cigna has touted as an important source of growth, climbed 24 percent to $866 million.
Cigna also took a charge in the quarter from its variable annuity death benefits business. Cigna discontinued that and its guaranteed minimum income benefits business in 2000 and operates both in run-off mode, meaning it seeks no new business. Those businesses still can hurt the company's performance when Cigna's liabilities toward them increase.
Cigna now expects 2012 earnings to range between $5.20 and $5.55 per share, after forecasting in February annual earnings of $5 to $5.40 per share. Analysts expect, on average, $5.44 per share, with estimates ranging from $5.20 to $5.70.
