Tags: US | Earns | Cigna

Cigna Profit Rises 36 Percent as Premiums Grow

Thursday, 06 May 2010 10:13 AM

 

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Cigna Corp. said Thursday its net income climbed 36 percent in the first quarter, as stabilizing enrollment helped premium revenue, and the health insurer got a boost from international business.

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 the fourth-largest U.S. health insurers based on enrollment 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.

Company officials said during a Thursday morning conference call with analysts they saw stabilizing employment markets during the quarter. Insurers have been hurt during the recession by rising unemployment that has reduced the number of people covered by employer-sponsored health insurance.

Revenue from premiums and fees grew 12 percent to $4.54 billion.

Cigna operates health care, group disability and life segments in the U.S. The insurer also sells individual insurance in several countries and operates an expatriate business that covers people living outside their home countries.

After-tax earnings from its international business jumped 76 percent in the quarter to $72 million.

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 those discontinued operations were stable in the latest quarter.

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.

Cigna shares rose 72 cents, or 2.2 percent, to $32.72 at the start of trading Thursday morning.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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