Cigna Corporation (NYSE: CI) today reported first quarter 2013
consolidated revenues of $8.2 billion, an increase of 21% over the first
quarter of 2012. Revenues reflect growth in premiums and fees of 20% in
Global Health Care, 36% in Global Supplemental Benefits and 12% in Group
Disability and Life, driven by continued growth in our targeted customer
segments.
“Cigna's strong first quarter results reflect continued execution of our
strategy to deliver value to our customers and clients around the
world,” said David M. Cordani, President and Chief Executive Officer.
“Our diversified portfolio of individual and employer-based solutions
that focus on quality and affordability, positions us well for continued
growth through 2013 and beyond.”
Cigna's adjusted income from operations1 for the first
quarter of 2013 was $497 million, or $1.72 per share. This result
compares with $359 million, or $1.24 per share, for the first quarter of
2012. Adjusted income from operations1 in the first quarter
of 2013 reflects strong revenue growth, favorable operating expenses and
medical costs, including favorable prior year reserve development in the
Global Health Care business of $48 million after-tax, or $0.17 per share.
Cigna reported shareholders’ net income1 of $57 million, or
$0.20 per share, for the first quarter of 2013, compared with
shareholders’ net income1 of $371 million, or $1.28 per
share, for the first quarter of 2012. Shareholders’ net income1
included special items4 which generated losses of $558
million after-tax, or $1.93 per share in the first quarter of 2013, and
$41 million after-tax, or $0.14 per share, in the first quarter of 2012.
Shareholders’ net income1 also included realized investment
gains of $93 million after-tax, or $0.32 per share, in the first quarter
of 2013.
The special items recorded in the first quarter of 2013, include an
after-tax charge of $507 million related to our previously announced
exit of the Run-off Reinsurance businesses, and an after-tax charge of
$51 million related to a regulatory matter within our Disability
business.
CONSOLIDATED HIGHLIGHTS
The following table includes highlights of results and a
reconciliation of adjusted income from operations1 to
shareholders’ net income (dollars in millions, except per share amounts;
customers in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
2013
|
|
2012
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenues
|
|
$
|
8,183
|
|
$
|
6,754
|
|
$
|
7,620
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Earnings
|
|
|
|
|
|
|
|
|
|
|
Adjusted income from operations1 |
|
$
|
497
|
|
$
|
359
|
|
$
|
452
|
|
Net realized investment gains, net of taxes
|
|
|
93
|
|
|
12
|
|
|
15
|
|
GMIB results, net of taxes2 |
|
|
25
|
|
|
41
|
|
|
7
|
|
Special items, net of taxes4 |
|
|
(558)
|
|
|
(41)
|
|
|
(68)
|
|
Shareholders' net income1 |
|
$
|
57
|
|
$
|
371
|
|
$
|
406
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income from operations1, per share
|
|
$
|
1.72
|
|
$
|
1.24
|
|
$
|
1.57
|
|
Shareholders' net income1, per share
|
|
$
|
0.20
|
|
$
|
1.28
|
|
$
|
1.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of the Periods Ended
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
2013
|
|
2012
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Medical Customers
|
|
|
14,322
|
|
|
13,865
|
|
|
14,045
|
|
|
|
|
|
|
|
|
|
|
|
-
Cash and short term investments at the parent company were
approximately $620 million at March 31, 2013 and $700 million at
December 31, 2012.
-
As of May 2, 2013, the Company repurchased5 approximately
3.9 million shares of stock for approximately $250 million.
HIGHLIGHTS OF SEGMENT RESULTS
See Exhibit 2 for a reconciliation of adjusted income (loss) from
operations1 to segment earnings (loss)1.
Effective in the fourth quarter of 2012, Cigna realigned its businesses
to better leverage distribution and service capabilities for the benefit
of our global clients and customers, which resulted in a change to
Cigna's external reporting segments. Results for all periods presented
are now aggregated based on the nature of the products and services
delivered, rather than the geographies in which we operate.
Global Health Care
This segment includes Cigna’s Commercial and Government businesses which
deliver medical and specialty health care products and services provided
to domestic and multi-national clients and customers on guaranteed cost,
retrospectively experience-rated and service-only funding bases.
Specialty health care includes behavioral, dental, disease and medical
management, stop-loss, and pharmacy-related products and services.
Financial Results (dollars in millions, customers in thousands):
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
2013
|
|
2012
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums and Fees
|
|
$
|
5,824
|
|
$
|
4,869
|
|
$
|
5,399
|
|
Adjusted Income from Operations1 |
|
$
|
427
|
|
$
|
296
|
|
$
|
397
|
|
Adjusted Margin, After-Tax6 |
|
|
6.7%
|
|
|
5.5%
|
|
|
6.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
Customers:
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
13,848
|
|
13,431
|
|
|
13,596
|
|
Medicare and Medicaid
|
|
|
474
|
|
434
|
|
|
449
|
|
Medical
|
|
|
14,322
|
|
13,865
|
|
|
14,045
|
|
|
|
|
|
|
|
|
|
|
|
Behavioral Care
|
|
|
21,977
|
|
19,803
|
|
|
21,750
|
|
Dental
|
|
|
12,125
|
|
11,279
|
|
|
11,392
|
|
Pharmacy
|
|
|
6,922
|
|
6,584
|
|
|
6,772
|
|
Medicare Part D
|
|
|
1,213
|
|
1,268
|
|
|
1,264
|
|
|
|
|
|
|
|
|
|
|
-
Overall, Global Health Care results reflect continued growth in our
targeted customer segments.
-
First quarter premiums and fees increased approximately 20% relative
to first quarter 2012, due to an additional month of HealthSpring
premium reflecting the timing of the acquisition on January 31, 2012,
business growth, rate increases, and increased specialty penetration,
partially offset by current medical business mix, reflecting a
continued shift by clients to our Administrative Services Only (“ASO”)
solutions.
-
First quarter 2013 adjusted income from operations1
reflects continued growth in targeted medical and specialty
businesses, favorable prior year reserve development of approximately
$48 million after-tax, compared to $41 million after-tax of favorable
development in first quarter 2012, and improvement in the operating
expense ratio. First quarter 2013 results also reflect elevated
medical and pharmacy costs for flu-related illness primarily impacting
the Seniors business.
-
First quarter 2013 segment margins6 are higher than first
quarter 2012 primarily as a result of continued growth in targeted
medical and specialty businesses, as well as improvement in the
operating expense ratio.
-
Global Health Care medical claims payable7 was
approximately $1.8 billion at March 31, 2013 and $1.6 billion at
December 31, 2012.
Global Supplemental Benefits
This segment includes Cigna’s supplemental health, life, and accident
insurance, including Medicare supplement coverage, in the U.S. and in
foreign markets, primarily in Asia.
Financial Results (dollars in millions, policies in thousands):
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
2013
|
|
2012
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums and Fees
|
|
$
|
604
|
|
$
|
444
|
|
$
|
592
|
|
AdjustedIncome from Operations1 |
|
$
|
55
|
|
$
|
43
|
|
$
|
38
|
|
Adjusted Margin, After-Tax6 |
|
|
8.6%
|
|
|
9.1%
|
|
|
6.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of the Periods Ended:
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
2013
|
|
2012
|
|
2012
|
|
Policies (excluding China joint venture)
|
|
|
11,586
|
|
|
8,847
|
|
|
11,436
|
|
|
|
|
|
|
|
|
|
|
|
-
First quarter 2013 premiums and fees grew 36% relative to first
quarter 2012, reflecting recent acquisitions and attractive customer
retention and business growth, primarily South Korea.
-
First quarter 2013 adjusted income from operations1
reflects the impact of strong customer retention and business growth
as well as favorable claim experience and improvement in the operating
expense ratio.
-
First quarter 2013 segment margins6 are higher than fourth
quarter 2012 due to lower operating expenses.
-
First quarter 2012 adjusted income from operations1 also
includes an after-tax benefit of $8 million related to the
implementation of a capital management strategy.
-
The quarter over quarter increase in policies as of March 31, 2013
reflects the acquisitions of the Turkey joint venture and Great
American Supplemental Benefits as well as business growth.
Group Disability and Life
This segment includes Cigna’s group disability, life, and accident
insurance operations.
Financial Results (dollars in millions):
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
2013
|
|
2012
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums and Fees
|
|
$
|
858
|
|
$
|
763
|
|
$
|
804
|
|
AdjustedIncome from Operations1 |
|
$
|
49
|
|
$
|
68
|
|
$
|
56
|
|
Adjusted Margin, After-Tax6 |
|
|
5.2%
|
|
|
8.1%
|
|
|
6.4%
|
|
|
|
|
|
|
|
|
|
|
|
-
First quarter 2013 results benefited from premium and fee growth of
12%.
-
Adjusted income from operations1 and segment margins6
for the first quarter of 2013 reflect the effect of unfavorable claims
experience, primarily in the disability business.
Other Segments
Adjusted income (loss) from operations1 for Cigna's remaining
operations are presented below (dollars in millions):
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
2013
|
|
2012
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
Run-off Reinsurance2
|
|
$
|
(1)
|
|
$
|
(11)
|
|
$
|
-
|
|
Other Operations
|
|
$
|
21
|
|
$
|
20
|
|
$
|
19
|
|
Corporate
|
|
$
|
(54)
|
|
$
|
(57)
|
|
$
|
(58)
|
|
|
|
|
|
|
|
|
|
|
|
-
During the first quarter of 2013, Cigna entered into a definitive
agreement with Berkshire Hathaway to exit the Run-off Reinsurance
businesses4.
OUTLOOK
-
Cigna increased its outlook for full year 2013 consolidated adjusted
income from operations1,3 to be in the range of $1.735
billion to $1.865 billion, or $6.00 to $6.45 per share.
|
|
|
|
|
Full-Year Ended
|
|
(dollars in millions, except per share amounts)
|
|
December 31, 2013
|
|
|
|
|
|
|
Adjusted income (losses) from operations1,3 |
|
|
|
|
Global Health Care
|
|
$
|
1,465 to 1,555
|
|
Global Supplemental Benefits
|
|
|
160 to 180
|
|
Group Disability and Life
|
|
|
270 to 290
|
|
Ongoing Businesses
|
|
$
|
1,895 to 2,025
|
|
|
|
|
|
|
Corporate and other
|
|
|
(160)
|
|
Consolidated
|
|
$
|
1,735 to 1,865
|
|
|
|
|
|
|
Consolidated Adjusted income from operations, per share1,3 |
|
$
|
6.00 to 6.45
|
|
|
|
|
|
|
Global medical customer growth
|
|
|
1% to 2%
|
|
|
-
Cigna’s outlook excludes the potential effects of additional prior
year reserve development and future capital deployment5.
The foregoing statements represent management’s current estimate of
Cigna's 2013 consolidated and segment adjusted income from operations1,3
as of the date of this release. Actual results may differ materially
depending on a number of factors, and investors are urged to read the
Cautionary Statement included in this release for a description of those
factors. Management does not assume any obligation to update these
estimates.
This quarterly earnings release and the Quarterly Financial Supplement
are available on Cigna’s website in the Investor Relations section (http://www.cigna.com/aboutus/investor-relations).
A link to the conference call, during which management will review first
quarter 2013 results and discuss full year 2013 outlook, is available in
the Investor Relations section of Cigna’s website (http://www.cigna.com/aboutcigna/investors/events/index.page).
|
|
|
|
|
Notes:
|
|
|
|
|
|
1.
|
|
Cigna measures the financial results of its segments using
segment earnings (loss), which is defined as shareholders’ net
income (loss) before net realized investment results. Adjusted
income (loss) from operations is defined as segment earnings
(loss) excluding special items (which are identified and
quantified in Note 4) and the results of Cigna's GMIB business.
Adjusted income (loss) from operations is a measure of
profitability used by Cigna’s management because it presents the
underlying results of operations of Cigna’s businesses and permits
analysis of trends in underlying revenue, expenses and
shareholders’ net income. This measure is not determined in
accordance with generally accepted accounting principles (GAAP)
and should not be viewed as a substitute for the most directly
comparable GAAP measures, which are segment earnings (loss) and
shareholders’ net income; see Exhibits 1 and 2 for reconciliations
of the non-GAAP measure to the most directly comparable GAAP
measures.
|
|
|
|
|
|
|
|
Effective December 31, 2012, Cigna made changes to external
reporting segments to reflect the Company’s realignment of its
businesses to leverage distribution and service delivery
capabilities for the benefit of our global clients and customers.
Prior period amounts have been presented on a comparable basis.
|
|
|
|
|
|
2.
|
|
The Guaranteed Minimum Income Benefits (GMIB) business and
Guaranteed Minimum Death Benefits business, also known as Variable
Annuity Death Benefits (VADBe), are included in our Run-off
Reinsurance operations. These businesses have been in run-off
since 2000.
|
|
|
|
|
|
|
|
During the first quarter of 2013, Cigna entered into a
definitive agreement with Berkshire Hathaway to exit the Run-off
Reinsurance businesses, effective February 4, 2013.
|
|
|
|
|
|
3.
|
|
Information is not available for management to reasonably
estimate (1) future net realized investment gains (losses) or (2)
fair value changes in GMIB assets and liabilities; therefore, it
is not possible to provide a forward-looking reconciliation of
adjusted income from operations to shareholders’ income from
continuing operations. We expect that special items for 2013 may
include potential adjustments associated with litigation and other
items. Information is not available for management to identify, or
reasonably estimate additional 2013 special items.
|
|
|
|
|
|
4.
|
|
Special items included in shareholders’ net income and segment
earnings (loss), but excluded from adjusted income (loss) from
operations, and the calculation of adjusted margins include:
|
|
|
|
|
|
|
|
First Quarter 2013
|
|
|
|
-- After-tax loss of $507 million related to the exit of the
Run-off Reinsurance businesses.
|
|
|
|
-- After-tax loss of $51 million related to a regulatory matter
within the Disability business.
|
|
|
|
|
|
|
|
Fourth Quarter 2012
|
|
|
|
-- After-tax loss of $68 million related to litigation matters.
|
|
|
|
|
|
|
|
First Quarter 2012
|
|
|
|
-- After-tax loss of $28 million related to transaction costs
for the 2012 acquisition of HealthSpring.
|
|
|
|
-- After-tax loss of $13 million related to a litigation matter.
|
|
|
|
|
|
5.
|
|
Share repurchases may from time to time be made pursuant to
written trading plans under Rule 10b5-1, which permit shares to be
repurchased when Cigna might otherwise be precluded from doing so
under insider trading laws or because of self-employed trading
blackout periods.
|
|
|
|
|
|
6.
|
|
Adjusted margins in this press release are calculated by
dividing adjusted income from operations1
by segment revenues. Segment margins including special items were
(0.2%) for Group Disability and Life for the three months ended
March 31, 2013, and 5.1% for Global Health Care for the three
months ended March 31, 2012.
|
|
|
|
|
|
7.
|
|
Global Health Care medical claims payable are presented net of
reinsurance and other recoverables. The gross Global Health Care
medical claims payable balance was $2,000 million as of March 31,
2013 and $1,856 million as of December 31, 2012.
|
|
|
|
|
CAUTIONARY STATEMENT FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Cigna Corporation and its subsidiaries (the “Company”) and its
representatives may from time to time make written and oral
forward-looking statements, including statements contained in press
releases, in the Company’s filings with the Securities and Exchange
Commission, in its reports to shareholders and in meetings with analysts
and investors. Forward-looking statements may contain information about
financial prospects, economic conditions, trends and other
uncertainties. These forward-looking statements are based on
management’s beliefs and assumptions and on information available to
management at the time the statements are or were made. Forward-looking
statements include, but are not limited to, the information concerning
possible or assumed future business strategies, financing plans,
competitive position, potential growth opportunities, potential
operating performance improvements, trends and, in particular, the
Company’s strategic initiatives, litigation and other legal matters,
operational improvement initiatives in the health care operations, and
the outlook for the Company’s full year 2013 and beyond results.
Forward-looking statements include all statements that are not
historical facts and can be identified by the use of forward-looking
terminology such as the words “believe”, “expect”, “plan”, “intend”,
“anticipate”, “estimate”, “predict”, “potential”, “may”, “should” or
similar expressions.
By their nature, forward-looking statements: (i) speak only as of the
date they are made, (ii) are not guarantees of future performance or
results and (iii) are subject to risks, uncertainties and assumptions
that are difficult to predict or quantify. Therefore, actual results
could differ materially and adversely from those forward-looking
statements as a result of a variety of factors. Some factors that could
cause actual results to differ materially from the forward-looking
statements include:
|
|
|
|
|
|
|
|
|
1.
|
|
health care reform legislation, as well as additional changes in
state or federal regulation, that could, among other items, affect
the way the Company does business, increase costs, limit the ability
to effectively estimate, price for and manage medical costs, and
affect the Company’s products, services, market segments, technology
and processes;
|
|
|
|
2.
|
|
adverse changes in state, federal and international laws and
regulations, including increased medical, administrative, technology
or other costs resulting from new legislative and regulatory
requirements imposed on the Company’s businesses;
|
|
|
|
3.
|
|
risks associated with pending and potential state and federal class
action lawsuits, disputes regarding reinsurance arrangements, other
litigation and regulatory actions challenging the Company’s
businesses, including disputes related to payments to health care
professionals, government investigations and proceedings, tax audits
and related litigation, and regulatory market conduct and other
reviews, audits and investigations, including the possibility that
the acquired HealthSpring business may be adversely affected by
potential changes in risk adjustment data validation audit and
payment adjustment methodology;
|
|
|
|
4.
|
|
challenges and risks associated with implementing improvement
initiatives and strategic actions in the ongoing operations of the
businesses, including those related to: (i) growth in targeted
geographies, product lines, buying segments and distribution
channels, (ii) offering products that meet emerging market needs,
(iii) strengthening underwriting and pricing effectiveness, (iv)
strengthening medical cost results and a growing medical customer
base, (v) delivering quality service to members and health care
professionals using effective technology solutions, and (vi)
lowering administrative costs;
|
|
|
|
5.
|
|
the unique political, legal, operational, regulatory and other
challenges associated with expanding our business globally;
|
|
|
|
6.
|
|
challenges and risks associated with the successful management of
the Company’s outsourcing projects or key vendors;
|
|
|
|
7.
|
|
the ability of the Company to execute its growth plans by
successfully leveraging capabilities and integrating acquired
businesses, including the HealthSpring businesses by, among other
things, operating Medicare Advantage plans and HealthSpring’s
prescription drug plan, retaining and growing the customer base,
realizing revenue, expense and other synergies, renewing contracts
on competitive terms or maintaining performance under Medicare
contracts, successfully leveraging the information technology
platform of the acquired businesses, and retaining key personnel;
|
|
|
|
8.
|
|
risks associated with security or interruption of information
systems, that could, among other things, cause operational
disruption;
|
|
|
|
9.
|
|
risks associated with the Company’s information technology strategy,
including that the failure to make effective investments or execute
improvements may impede the Company’s ability to deliver services
efficiently;
|
|
|
|
10.
|
|
the failure to maintain effective prevention, detection and control
systems for regulatory compliance and detection of fraud and abuse;
|
|
|
|
11.
|
|
risks associated with the Company’s mail order pharmacy business
that, among other things, includes any potential operational
deficiencies or service issues as well as loss or suspension of
state pharmacy licenses;
|
|
|
|
12.
|
|
liability associated with the Company’s operations of onsite clinics
and medical facilities, including the health care centers operated
by the HealthSpring business;
|
|
|
|
13.
|
|
heightened competition, particularly price competition, that could
reduce product margins and constrain growth in the Company’s
businesses, primarily the Global Health Care business;
|
|
|
|
14.
|
|
significant stock market declines, that could, among other things,
impact the Company’s pension plans in future periods as well as the
recognition of additional pension obligations;
|
|
|
|
15.
|
|
significant changes in market interest rates or sustained
deterioration in the commercial real estate markets that could
reduce the value of the Company’s investment assets;
|
|
|
|
16.
|
|
downgrades in the financial strength ratings of the Company’s
insurance subsidiaries, that could, among other things, adversely
affect new sales and retention of current business or limit the
subsidiaries’ ability to dividend capital to the parent company,
resulting in changes in statutory reserve or capital requirements or
other financial constraints;
|
|
|
|
17.
|
|
significant deterioration in global market economic conditions and
market volatility, that could have an adverse effect on the
Company’s investments, liquidity and access to capital markets;
|
|
|
|
18.
|
|
unfavorable developments in economic conditions, that could, among
other things, have an adverse effect on the impact on the businesses
of our customers (including the amount and type of health care
services provided to their workforce, loss in workforce and ability
to pay their obligations), the businesses of hospitals and other
providers (including increased medical costs) or state and federal
budgets for programs, such as Medicare or social security, resulting
in a negative impact to the Company’s revenues or results of
operations;
|
|
|
|
19.
|
|
risks associated with the Company’s reinsurance arrangements for the
run-off retirement benefits, life insurance and annuity business,
variable annuity death benefits and guaranteed minimum income
benefits businesses, including but not limited to, failure by the
reinsurer to meet its reinsurance obligations or that the
reinsurance does not otherwise provide adequate protection; or
|
|
|
|
20.
|
|
potential public health epidemics, pandemics, natural disasters and
bio-terrorist activity, that could, among other things, cause the
Company’s covered medical and disability expenses, pharmacy costs
and mortality experience to rise significantly, and cause
operational disruption, depending on the severity of the event and
number of individuals affected.
|
|
|
|
|
|
|
This list of important factors is not intended to be exhaustive. Other
sections of the Company’s most recent Annual Report on Form 10-K,
including the “Risk Factors” section, and other documents filed with the
Securities and Exchange Commission include both expanded discussion of
these factors and additional risk factors and uncertainties that could
preclude the Company from realizing the forward-looking statements. The
Company does not assume any obligation to update any forward-looking
statements, whether as a result of new information, future events or
otherwise, except as required by law.
|
|
|
|
|
CIGNA CORPORATION
|
|
COMPARATIVE SUMMARY OF FINANCIAL RESULTS (unaudited)
|
|
Exhibit 1
|
|
(Dollars in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
Premiums and fees
|
|
$
|
7,314
|
|
$
|
6,107
|
|
Net investment income
|
|
|
287
|
|
|
288
|
|
Mail order pharmacy revenues
|
|
|
425
|
|
|
386
|
|
Other revenues
|
|
|
57
|
|
|
55
|
|
Total operating revenues
|
|
|
8,083
|
|
|
6,836
|
|
Run-off Reinsurance hedge loss (1)
|
|
|
(39)
|
|
|
(95)
|
|
Net realized investment gains
|
|
|
139
|
|
|
13
|
|
|
|
|
|
|
|
Total
|
|
$
|
8,183
|
|
$
|
6,754
|
|
|
|
|
|
|
|
ADJUSTED INCOME (LOSS) FROM OPERATIONS (2)
|
|
|
|
|
|
|
|
|
|
|
|
Global Health Care
|
|
$
|
427
|
|
$
|
296
|
|
Global Supplemental Benefits
|
|
|
55
|
|
|
43
|
|
Group Disability and Life
|
|
|
49
|
|
|
68
|
|
Run-off Reinsurance
|
|
|
(1)
|
|
|
(11)
|
|
Other Operations
|
|
|
21
|
|
|
20
|
|
Corporate
|
|
|
(54)
|
|
|
(57)
|
|
|
|
|
|
|
|
Total
|
|
$
|
497
|
|
$
|
359
|
|
|
|
|
|
|
|
SHAREHOLDERS' NET INCOME
|
|
|
|
|
|
|
|
|
|
|
|
Segment Earnings (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
Global Health Care (5)(6)
|
|
$
|
427
|
|
$
|
276
|
|
Global Supplemental Benefits
|
|
|
55
|
|
|
43
|
|
Group Disability and Life (4)
|
|
|
(2)
|
|
|
68
|
|
Run-off Reinsurance (3)
|
|
|
(483)
|
|
|
30
|
|
Other Operations
|
|
|
21
|
|
|
20
|
|
Corporate (6)
|
|
|
(54)
|
|
|
(78)
|
|
|
|
|
|
|
|
Total
|
|
|
(36)
|
|
|
359
|
|
Net realized investment gains, net of taxes
|
|
|
93
|
|
|
12
|
|
|
|
|
|
|
|
Shareholders' net income
|
|
$
|
57
|
|
$
|
371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED EARNINGS PER SHARE:
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income from operations (2)
|
|
$
|
1.72
|
|
$
|
1.24
|
|
Results of guaranteed minimum income benefits business, after-tax
|
|
|
0.09
|
|
|
0.14
|
|
Net realized investment gains, net of taxes
|
|
|
0.32
|
|
|
0.04
|
|
Special item(s), after-tax (3)(4)(5)(6)
|
|
|
(1.93)
|
|
|
(0.14)
|
|
Shareholders' net income
|
|
$
|
0.20
|
|
$
|
1.28
|
|
Weighted average shares (in thousands)
|
|
|
289,258
|
|
|
288,999
|
|
SHAREHOLDERS' EQUITY at March 31,
|
|
$
|
9,660
|
|
$
|
8,561
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY PER SHARE at March 31,
|
|
$
|
33.79
|
|
$
|
29.69
|
|
|
|
|
|
|
|
|
|
|
|
Effective December 31, 2012, Cigna changed its external reporting
segments. The primary change was that the two businesses that
comprised the former International segment (international health
care and supplemental health, life and accident) are now reported as
follows: 1) substantially all of the international health care
business (comprised primarily of the global health benefits
business) is now combined with the former Health Care segment and
renamed Global Health Care; and 2) the supplemental health, life and
accident business is now a separate reporting segment named Global
Supplemental Benefits. In addition, certain disability and life
products previously reported in the former Health Care segment are
now reported in the Group Disability and Life segment. Prior period
segment information has been conformed to the current reporting
segments. Please refer to Cigna's Form 8-K filed on January 24, 2013
for additional information.
|
|
|
|
(1) Includes pre-tax futures and swaps contracts entered into
prior to February 4, 2013 as part of a dynamic hedge program to
manage equity and growth interest rate risks in Cigna's Run-off
Reinsurance operations. Cigna recorded related offsets in Benefits
and Expenses to adjust liabilities for reinsured guaranteed minimum
death benefit and guaranteed minimum income benefit contracts. These
hedge programs were terminated after February 4, 2013 as a result of
Cigna's agreement with Berkshire Hathaway in which Cigna effectively
exited the Run-off Reinsurance business. For more information,
please refer to Cigna's Form 10-Q for the period ended March 31,
2013, which is expected to be filed on May 2, 2013.
|
|
|
|
(2) Adjusted income (loss) from operations is segment earnings
(loss) (shareholders' net income (loss) before net realized
investment gains (losses)) and excludes results of Cigna's
guaranteed minimum income benefits business and special items. See
Exhibit 2 for a detailed reconciliation of adjusted income (loss)
from operations to segment earnings (loss) and shareholders' net
income presented in accordance with generally accepted accounting
principles.
|
|
|
|
(3) The three months ended March 31, 2013 includes a pre-tax
charge of $781 million ($507 million after-tax) in Run-off
Reinsurance related to the transaction with Berkshire Hathaway in
which Cigna effectively exited the run-off reinsurance business.
|
|
|
|
(4) The three months ended March 31, 2013 includes a pre-tax
charge of $77 million ($51 million after-tax) related to a
disability claims regulatory matter in the Group Disability & Life
segment.
|
|
|
|
(5) The three months ended March 31, 2012 includes pre-tax
charges of $20 million ($13 million after-tax) resulting from a
litigation matter in Global Health Care.
|
|
|
|
(6) The three months ended March 31, 2012 includes pre-tax
charges of $41 million ($28 million after-tax) for costs associated
with the 2012 acquisition of HealthSpring: $30 million pre-tax ($21
million after-tax) in Corporate and $11 million pre-tax ($7 million
after-tax) in Global Health Care.
|
|
|
|
|
|
CIGNA CORPORATION
|
|
SUPPLEMENTAL FINANCIAL INFORMATION (unaudited)
|
|
Exhibit 2
|
|
RECONCILIATION OF ADJUSTED INCOME (LOSS) FROM OPERATIONS TO
SHAREHOLDERS' NET INCOME
|
|
(Dollars in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
Global
|
|
Group
|
|
|
|
|
|
|
|
|
|
Earnings
|
|
|
|
Global
|
|
Supplemental
|
|
Disability
|
|
Run-off
|
|
Other
|
|
|
|
|
|
Per Share
|
|
Consolidated
|
|
Health Care
|
|
Benefits
|
|
and Life
|
|
Reinsurance
|
|
Operations
|
|
Corporate
|
|
Three Months Ended March 31,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income (loss) from operations (1)
|
|
$
|
1.72
|
|
$
|
1.24
|
|
$
|
497
|
|
$
|
359
|
|
$
|
427
|
|
$
|
296
|
|
$
|
55
|
|
$
|
43
|
|
$
|
49
|
|
$
|
68
|
|
$
|
(1)
|
|
$
|
(11)
|
|
$
|
21
|
|
$
|
20
|
|
$
|
(54)
|
|
$
|
(57)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results of guaranteed minimum income benefits business (2)
|
|
|
0.09
|
|
|
0.14
|
|
|
25
|
|
|
41
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
25
|
|
|
41
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special item(s), after-tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge related to reinsurance transaction (3)
|
|
|
(1.75)
|
|
|
-
|
|
|
(507)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(507)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Charge associated with disability claims regulatory matter (4)
|
|
|
(0.18)
|
|
|
-
|
|
|
(51)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(51)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Costs associated with acquisitions (5)
|
|
|
-
|
|
|
(0.10)
|
|
|
-
|
|
|
(28)
|
|
|
-
|
|
|
(7)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(21)
|
|
Litigation matters (6)
|
|
|
-
|
|
|
(0.04)
|
|
|
-
|
|
|
(13)
|
|
|
-
|
|
|
(13)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment earnings (loss)
|
|
|
(0.12)
|
|
|
1.24
|
|
|
(36)
|
|
|
359
|
|
$
|
427
|
|
$
|
276
|
|
$
|
55
|
|
$
|
43
|
|
$
|
(2)
|
|
$
|
68
|
|
$
|
(483)
|
|
$
|
30
|
|
$
|
21
|
|
$
|
20
|
|
$
|
(54)
|
|
$
|
(78)
|
|
Net realized investment gains, net of taxes
|
|
|
0.32
|
|
|
0.04
|
|
|
93
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' net income
|
|
$
|
0.20
|
|
$
|
1.28
|
|
$
|
57
|
|
$
|
371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
Global
|
|
Group
|
|
|
|
|
|
|
|
|
|
Earnings
|
|
|
|
Global
|
|
Supplemental
|
|
Disability
|
|
Run-off
|
|
Other
|
|
|
|
|
|
Per Share
|
|
Consolidated
|
|
Health Care
|
|
Benefits
|
|
and Life
|
|
Reinsurance
|
|
Operations
|
|
Corporate
|
|
Three Months Ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income (loss) from operations (1)
|
|
|
|
$
|
1.57
|
|
|
|
$
|
452
|
|
|
|
$
|
397
|
|
|
|
$
|
38
|
|
|
|
$
|
56
|
|
|
|
$
|
-
|
|
|
|
$
|
19
|
|
|
|
$
|
(58)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results of guaranteed minimum income benefits business (2)
|
|
|
|
0.02
|
|
|
|
|
7
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
7
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special item(s), after-tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs associated with litigation matters (7)
|
|
|
|
|
(0.24)
|
|
|
|
|
(68)
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(68)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment earnings (loss)
|
|
|
|
|
1.35
|
|
|
|
|
391
|
|
|
|
$
|
397
|
|
|
|
$
|
38
|
|
|
|
$
|
56
|
|
|
|
$
|
7
|
|
|
|
$
|
19
|
|
|
|
$
|
(126)
|
|
Net realized investment gains, net of taxes
|
|
|
|
|
0.06
|
|
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' net income
|
|
|
|
$
|
1.41
|
|
|
|
$
|
406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Cigna measures the financial results of its segments using
"segment earnings (loss)", which is defined as shareholders' net
income (loss) before net realized investment gains (losses).
Adjusted income (loss) from operations is defined as segment
earnings excluding special items and results of Cigna's guaranteed
minimum income benefits business.
|
|
|
|
|
|
(2)
|
|
Results of guaranteed minimum income benefits business on a
pre-tax basis for:
|
|
|
|
- three months ended March 31, 2013 and 2012 were gains of $39
million and $63 million, respectively;
|
|
|
|
- three months ended December 31, 2012 were gains of $10
million.
|
|
|
|
|
|
(3)
|
|
The three months ended March 31, 2013 includes a pre-tax charge
of $781 million ($507 million after-tax) in Run-Off Reinsurance
related to the transaction with Berkshire Hathaway in which Cigna
effectively exited the run-off reinsurance business.
|
|
|
|
|
|
(4)
|
|
The three months ended March 31, 2013 includes a pre-tax charge
of $77 million ($51 million after-tax) related to a disability
claims regulatory matter in the Group Disability & Life segment.
|
|
|
|
|
|
(5)
|
|
The three months ended March 31, 2012 includes pre-tax charges
of $41 million ($28 million after-tax) for costs associated with
the 2012 acquisition of HealthSpring: $30 million pre-tax ($21
million after-tax) in Corporate and $11 million pre-tax ($7
million after-tax) in Global Health Care.
|
|
|
|
|
|
(6)
|
|
The three months ended March 31, 2012 includes pre-tax charges
of $20 million ($13 million after-tax) resulting from a litigation
matter in Global Health Care.
|
|
|
|
|
|
(7)
|
|
The three months ended December 31, 2012 includes pre-tax
charges of $104 million ($68 million after-tax) resulting from
litigation matters in Corporate.
|
|
|
|
|
