Cigna Corporation (NYSE: CI) today reported second quarter 2014 results
with each of the Company's business segments posting strong revenue and
Consolidated revenues in the quarter were $8.7 billion, an increase of
9% over second quarter 2013. Revenues reflect growth in premiums and
fees of 8% in Global Health Care, 18% in Global Supplemental Benefits
and 5% in Group Disability and Life, primarily driven by continued
growth in Cigna's targeted customer segments.
Cigna's adjusted income from operations1 for the second
quarter of 2014 was $530 million, or $1.96 per share, compared to $512
million, or $1.78 per share, for the second quarter of 2013. Results in
the second quarter of 2014 reflect solid revenue growth, disciplined
expense management and continued effective medical cost management.
"Our sustained growth in a dynamic marketplace is driven by our
commitment to innovation and our differentiated capabilities for the
benefit of our customers and clients around the world," said David M.
Cordani, President and Chief Executive Officer. "This customer focus and
our diversified portfolio enable us to deliver attractive growth over
Cigna reported shareholders' net income of $573 million, or $2.12 per
share, for the second quarter of 2014, compared to $505 million, or
$1.76 per share, for the second quarter of 2013.
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):
HIGHLIGHTS OF SEGMENT RESULTS
See Exhibit 2 for a reconciliation of adjusted income (loss) from
operations1 to segment earnings (loss).
Global Health Care
This segment includes Cigna's Commercial and Government businesses that
deliver medical and specialty health care products and services to
domestic and multi-national clients and customers on guaranteed cost,
retrospectively experience-rated and administrative services only
("ASO") funding arrangements. 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):
Global Supplemental Benefits
This segment includes Cigna's global individual supplemental health,
life, and accident insurance business, primarily in Asia, and Medicare
supplement coverage in the United States.
Financial Results (dollars in millions, policies in thousands):
Three Months Ended
Adjusted Income from Operations1
Group Disability and Life
This segment includes Cigna's group disability, life, and accident
Financial Results (dollars in millions):
Corporate & Other Operations
Adjusted income (loss) from operations1 for Cigna's remaining
operations is presented below (dollars in millions):
1% to 2%
The foregoing statements represent the Company's current estimates of
Cigna's 2014 consolidated and segment adjusted income from operations1,2
and global medical customer growth as of the date of this release.
Actual results may differ materially depending on a number of factors.
Investors are urged to read the Cautionary Note Regarding
Forward-Looking Statements included in this release. 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/aboutcigna/investors).
A link to the conference call, during which management will review
second quarter 2014 results and discuss full year 2014 outlook, is
available in the Investor Relations section of Cigna's website located
Adjusted income (loss) from operations is defined as segment
earnings (loss) excluding (i) special items (which are identified
and quantified in Exhibit 2 to this release) and (ii) the results
of Cigna's Guaranteed Minimum Income Benefits (GMIB) business.
Segment earnings (loss) is defined as shareholders' net income
(loss) before net realized investment results.
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 accounting principles generally accepted in the
United States of America (GAAP) and should not be viewed as a
substitute for the most directly comparable GAAP measures, which
are segment earnings (loss) on a segment basis and shareholders'
net income on a consolidated basis; see Exhibit 2 for
reconciliations of the non-GAAP measures to the most directly
comparable GAAP measures.
Management is unable to provide a forward-looking
reconciliation of adjusted income from operations to shareholders'
net income for full year 2014 since future net realized investment
results and special items cannot be identified or reasonably
estimated at this time.
The Company may repurchase shares of its common stock from time
to time. The Company's outlook excludes the potential effects of
any share repurchases that may occur after the date of this
Special items are included in shareholders' net income and
segment earnings (loss), but excluded from adjusted income (loss)
from operations. Special items are identified on Exhibit 2 to this
In connection with U.S. health care reform legislation, the
Company ceased offering Limited Medical Benefits products
effective December 31, 2013. Therefore, the Company's medical
customer growth expectations for 2014 exclude these products from
the 2013 customer numbers. As of June 30, 2013 and December 31,
2013, there were 174,000 and 139,000 customers enrolled in these
Adjusted margin, after-tax, is calculated by dividing segment
earnings (loss) excluding special items by segment revenues.
Segment margin is calculated by dividing segment earnings (loss)
by segment revenue. For the three months ended June 30, 2014 and
the three months ended March 31, 2014 segment margins were equal
to adjusted margins. For the three months ended June 30, 2013,
segment margin was 6.1% for Global Health Care.
Prior period dental membership has been revised to conform to
Global Health Care medical claims payable are presented net of
reinsurance and other recoverables. The gross Global Health Care
medical claims payable balance was $2.28 billion as of June 30,
2014 and $2.05 billion as of December 31, 2013.
Cigna owns a 50% noncontrolling interest in its China joint
venture. Cigna's 50% share of the joint venture's earnings is
reported in Other Revenues using the equity method of accounting
under GAAP. As such, the premiums and fees and policy counts for
the Global Supplemental Benefits segment do not include the China
The GMIB business and Guaranteed Minimum Death Benefits
business, also known as Variable Annuity Death Benefits (VADBe),
have been in run-off since 2000. Cigna entered into a definitive
agreement with Berkshire Hathaway to exit the GMIB and VADBe
businesses, effective February 4, 2013.
Prior to first quarter of 2014, the GMIB and VADBe businesses
were reported within the Runoff Reinsurance segment. Beginning
with the first quarter of 2014, Cigna reports its run-off
reinsurance business in Other Operations. In addition, in this
earnings release, Other Operations and Corporate have been
combined under the heading "Corporate and Other Operations." Prior
year information has been conformed to the current presentation.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release, and oral statements made with respect to information
contained in this release, may contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are based on Cigna's current expectations and
projections about future trends, events and uncertainties. These
statements are not historical facts. Forward-looking statements may
include, among others, statements concerning our projected adjusted
income (loss) from operations outlook for 2014, on both a consolidated
and segment basis; projected global medical customer growth (excluding
limited benefits) over year end 2013; future financial or operating
performance, including our ability to deliver improved health outcomes
and productivity for our customers and clients and future growth,
business strategy, strategic or operational initiatives; economic,
regulatory or competitive environments, particularly with respect to the
pace and extent of change in these areas; and financing or capital
deployment plans, including whether and to what extent we may engage in
share repurchases. You may identify forward-looking statements by the
use of words such as "believe," "expect," "plan," "intend,"
"anticipate," "estimate," "predict," "potential," "may," "should,"
"will" or other words or expressions of similar meaning, although not
all forward-looking statements contain such terms.
Forward-looking statements are subject to risks and uncertainties, both
known and unknown, that could cause actual results to differ materially
from those expressed or implied in forward-looking statements. Such
risks and uncertainties include, but are not limited to: our ability to
achieve our financial, strategic and operational plans or initiatives;
our ability to predict and manage medical costs and price effectively
and develop and maintain good relationships with physicians, hospitals
and other health care providers; our ability to realize the expected
benefits of strategic transactions and/or acquisitions; the substantial
level of government regulation over our business and the potential
effects of new laws or regulations, or changes in existing laws or
regulations; the outcome of litigation, regulatory audits,
investigations and actions and/or guaranty fund assessments;
uncertainties surrounding participation in government-sponsored programs
such as Medicare; and unfavorable industry, economic or political
conditions, as well as more specific risks and uncertainties discussed
in our most recent report on Form 10-K and subsequent reports on Forms
10-Q and 8-K available on the Investor Relations section of www.cigna.com.
You should not place undue reliance on forward-looking statements, which
speak only as of the date they are made, are not guarantees of future
performance or results, and are subject to risks, uncertainties and
assumptions that are difficult to predict or quantify. Cigna undertakes
no obligation to update or revise any forward-looking statement, whether
as a result of new information, future events or otherwise, except as
may be required by law.
Segment Earnings (Loss)
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