Cigna takes 4Q loss on runoff reinsurance losses

[February 05, 2009]  NEW YORK (AP) -- Health insurer Cigna Corp. on Thursday posted a loss in the fourth quarter due to investment losses, but it forecast 2009 income would exceed estimates.

Philadelphia-based Cigna said it lost $209 million, or 77 cents per share, compared with earnings $263 million, or 93 cents per share, a year ago. The latest quarter's results include $405 million in losses for two segments: the variable annuity death benefits business and the guaranteed minimum death benefits business.

Cigna also took a $35 million charge due to restructuring costs.

Excluding items, Cigna says it earned 49 cents per share. Greater premiums lifted its revenue 8 percent to $4.82 billion. Premium revenue rose 6 percent, to $4.04 billion from $3.8 billion.

Analysts expected profit of 41 cents per share and $4.75 billion in revenue.

Cigna said the losses at the runoff reinsurance businesses were mostly due to unfavorable changes in equity markets and interest rates. Liabilities for those segments increase when market returns are bad. Cigna discontinued the business in 2000.

Cigna says its medical membership grew 15 percent to 11.7 million.

Cigna lowered its forecast for 2009, saying it expects an adjusted profit of $3.95 to $4.25 per share from operations. Previously, the company had expected $4 to $4.30 per share.

Analysts project income of $3.87 per share.

Cigna's forecast includes $1.08 billion to $1.15 billion in adjusted profit from operations, down slightly from its estimate of $1.09 billion to $1.18 billion in October. Cigna expects $700 million to $760 million in adjusted profit from the health care business.

Cigna said medical membership will fall about 3 percent for the year, implying membership of about 11.3 million.

The company said its reserves are adequate and equity market conditions will return to "more normal levels" for the year. Cigna said the variable annuity death benefits business will break even in 2009.

Cigna said its adjusted profit fell 20 percent in fiscal 2008, to $946 million, or $1.05 per share, from $1.18 billion, or $3.87 per share. Revenue increased 8 percent, to $19.1 billion from $17.62 billion.

[Associated Press]

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