Insurer Cigna's 4Q profit jumps 40 percent

[February 03, 2011]  INDIANAPOLIS (AP) -- Managed care company Cigna Corp. said Thursday its fourth-quarter net income climbed 40 percent, boosted in part by interest rates and a decline in health care use that also helped other insurers in the final months of 2010.

The Philadelphia insurer earned $461 million, or $1.69 per share, in the three months that ended Dec. 31. That's up from $330 million, or $1.19 per share, in the last three months of 2009. Revenue grew 17 percent to $5.43 billion.

Excluding some one-time items, adjusted earnings amounted to $1.15 a share. Analysts surveyed by FactSet forecast, on average, a profit of $1 per share on $5.38 billion in revenue.

Cigna operates health care, group disability and life segments in the United States. It also sells individual insurance in several countries and operates an expatriate business that provides coverage for people living outside their home countries.

Premiums and fees from health care, Cigna's largest segment, grew 20 percent to $3.37 billion due to membership growth and a higher percentage of commercial and Medicare-related risk business, the insurer said.

The company also recorded earnings of 31 cents per share in the quarter from its Guaranteed Minimum Income Benefits business, mainly due to favorable interest rate movements. Cigna discontinued that business, and its variable annuity death benefits, in 2000. It operates both in run-off mode, meaning it seeks no new businesses.

Cigna also said lower-than-expected health care use helped the company's performance. It also saw a benefit from that in the third quarter, and competitors UnitedHealth Group Inc. and WellPoint Inc. both cited a drop in use as they finished 2010 with better-than-expected earnings.

Use has fallen in part because swine flu cases drove up costs at the end of 2009, which affects comparisons to last year's quarters, and consumers tend to cut back on care during a struggling or recovering economy as they look to save money. But industry observers expect this trend to revert to normal levels in 2011.

Cigna is the fourth-largest U.S. health insurer based on enrollment.

[Associated Press]

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