--Cigna caps reports for big managed-care firms with
better-than-expected earnings
--Company raises full-year guidance
--HealthSpring deal contributes to surging revenue
(Updates with details on results, background on managed-care
sector, analyst comment.)
By Jon Kamp
Cigna Corp.'s (CI) second-quarter earnings slipped 2.8%,
pressured by losses in a business Cigna is departing, but the
health insurer still turned in a better-than-expected quarter as a
recent acquisition and membership growth pumped up revenue.
Cigna--which raised its full-year adjusted earnings guidance by
five cents a share--capped a turbulent reporting season for the
biggest managed-care firms on a solid note. While UnitedHealth
Group Inc. (UNH) and Aetna Inc. (AET) also beat Wall Street
expectations and raised guidance, WellPoint Inc. (WLP) and Humana
Inc. (HUM) had more complicated quarters and guidance cuts.
"Cigna's results look good enough to please, particularly given
the mixed bag of results reported by industry peers thus far for
2Q12," Susquehanna analyst Chris Rigg said.
Shares of the Bloomfield, Conn., company were recently inactive
in premarket trading. Shares have declined more than 12% over the
past 12 months.
Cigna reported a second-quarter profit of $380 million, or $1.31
a share, down from $391 million, or $1.43, a year earlier. The
company reported a bigger loss in the recent period connected to a
guaranteed minimum income benefits business it has long been
winding down. Excluding this impact, per-share earnings rose to
$1.49 from $1.47. Revenue jumped 35% to $7.46 billion.
Analysts polled by Thomson Reuters had forecast earnings of
$1.42 a share on revenue of $7.24 billion.
The company, which has traditionally focused more on commercial
health coverage, bought Medicare-focused insurer HealthSpring Inc.
in January for $3.8 billion, pushing it further into a market for
senior-focused plans. Cigna also agreed in May to buy American
Financial Group Inc.'s (AFG) Medicare supplement and
critical-illness businesses for about $295 million in cash.
Managed-care firms have been bulking up their coverage of
seniors as baby boomers age and Medicare Advantage plans--the
insurers' version of the government program--become more
popular.
Cigna's health-care segment posted a 52% increase in premiums
and fees, boosted by the HealthSpring deal, organic business growth
and rate increases. The margins in this business declined because
of HealthSpring and a smaller contribution from excess reserves
that Cigna previously set aside to cover expected member costs.
Total medical membership rose 9.7% to 13.8 million from 12.6
million a year ago.
The company is now expecting full-year adjusted earnings between
$5.25 and $5.60 a share. Analysts, on average, were expecting
earnings of $5.51 a share, according to Thomson Reuters.
--Melodie Warner contributed to this report.
Write to Jon Kamp at jon.kamp@dowjones.com
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