Cigna 1Q profit rises 36 percent as premiums grow

[May 06, 2010]  NEW YORK (AP) -- Health insurer Cigna Corp. said Thursday its net income climbed 36 percent in the first quarter because of greater premium revenue and better results from two discontinued businesses.

The company earned $283 million, or $1.02 per share, up from $208 million, or 76 cents per share a year ago.

Revenue rose 9 percent to $5.21 billion from $4.77 billion.

Analysts expected earnings of 90 cents per share and revenue of $4.92 billion, according to a survey by Thomson Reuters.

But comparing these averages to Cigna's adjusted results can be difficult because the insurer includes results from a discontinued business. Many analysts' projections do not.

Cigna is one of the largest U.S. health insurers and had 11.4 million members at the end of the quarter. That's about the same number it had a year ago. Cigna now expects medical enrollment to rise 2 to 3 percent this year. In February the company said medical membership could decline as much as 1 percent or grow as much as 2 percent.

Premium revenue grew 12 percent to $4.54 billion. The company said it handled more commercial and Medicare-related business in the most recent quarter.

The Philadelphia insurer's earnings have ebbed and flowed in recent quarters based in large part on a couple discontinued businesses: guaranteed minimum income benefits and variable annuity death benefits.

Cigna discontinued both in 2000 and operates them in run-off mode, meaning it seeks no new business. Those operations hurt the company's performance when the market turns bad because Cigna's liabilities toward them increase.

In the first quarter of 2009, the company lost $49 million from the businesses because of the market downturn. However, results from the discontinued operations were stable in the latest quarter. In the last quarter of 2009, interest rates and improved equity markets erased the earnings drag those businesses had been creating.

The company maintained its profit forecast of $1.05 billion to $1.15 billion, or $3.75 to $4.15 per share. Analysts expect $4.03 per share, on average.

[Associated Press]

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