Insurer Cigna Corp. posted a lower-than-expected first-quarter profit on Thursday, as spending weighed on its disability and life coverage segment, but the company raised its full-year profit outlook.
Cigna expects an increased profit from its main healthcare segment for 2012, helping drive its higher earnings projections for the year. It now expects to enroll 1.2 million more members this year, up from prior expectations of an increase of 900,000, as the insurer adds to its plans serving employers.
"We believe the update to guidance should more than offset any (disappointment) around the modest earnings shortfall," Susquehanna Financial Group analyst Chris Rigg said in a research note.
Shares of Cigna slipped 0.1 percent in morning trading.
Cigna's report closes a mixed reporting season for major U.S. health insurers. Aside from Cigna, Aetna Inc, Coventry Health Care and Humana Inc. all missed Wall Street profit targets during the period.
Separately on Thursday, smaller insurer Health Net Inc reported weak quarterly results and slashed its full-year earnings forecast, sending its shares tumbling 22 percent.
Cigna's net income fell to $371 million, or $1.28 per share, from $413 million, or $1.51 per share, a year earlier.
Excluding special items, Cigna's earnings of $1.28 per share fell 2 cents below the analysts' average estimate, according to Thomson Reuters I/B/E/S.
Revenue jumped 25 percent to $6.79 billion, helped by the acquisition of Medicare specialist HealthSpring, which closed at the end of January.
The $3.8 billion acquisition jump-started Cigna's business selling privately administered Medicare plans for senior citizens, as the insurer seeks to capitalize on the wave of baby boomers becoming eligible for the federal health program.
Profit in the main healthcare segment rose 6.5 percent to $262 million. Enrollment in its plans stood at 12.22 million at the end of March, up more than 7 percent.
"Enrollment growth in the quarter was stronger than expected," Leerink Swann analyst Jason Gurda said.
The company's profit also benefited from $38 million it had set aside to pay for medical claims in prior periods, because those claims did not materialize.
Earnings in its disability and life segment fell 16 percent to $65 million. The company cited strategic investments in its disability management programs as a factor pushing down profit. Leerink's Gurda was expecting earnings of $68 million for the segment.
Profit jumped 31 percent to $80 million in its international segment, in which it sells supplemental insurance to individuals in Asia and elsewhere and offers coverage to employees working abroad.
Cigna forecast 2012 earnings of $5.20 to $5.55 per share. It previously projected $5.00 to $5.40. Analysts have been looking for $5.41.
Cigna shares fell 0.1 percent to $46.51 in morning trading on the New York Stock Exchange. Through Wednesday, Cigna shares had climbed nearly 11 percent this year, compared with a 9 percent rise for the Morgan Stanley Healthcare Payor index of health insurers.
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