Cigna posts profit, raises 2004 forecast

Cigna Corp, one of the biggest US health insurers, posted a second-quarter profit on Wednesday, reversing a year-earlier loss, as it kept medical costs under control and reaped a big gain from selling a business.
The Philadelphia-based company also boosted its 2004 profit estimate. However, shares fell after the company attributed most of the improved forecast to the one-time sale of its retirement unit, and it predicted further enrolment losses into 2005.
The last of the big health insurers to post quarterly results, Cigna is turning itself around after losses in 2002 and 2003 after difficulties in gauging medical costs. It culled its enrollment from a peak of 13.4 million in 2001 to 10 million at present, as the health plan focused on profitable members.
"Cigna is on track with its turnaround," Ellen Wilson, an analyst at Sanford Bernstein, told investors in a market note.
Net income totalled $515 million, or $3.67 a share, compared with a net loss of $53 million, or 38 cents a share, a year earlier.
A big part of earnings came from sales of its retirement unit to Prudential Financial Inc in April.
Revenue, mostly from premiums, was nearly unchanged at $4.63 billion.
Excluding investment gains and losses and other items, net income from continuing operations rose 56 percent to $246 million, or $1.75 per share, from $158 million, or $1.13 per share. On that basis, Wall Street analysts polled by Reuters Estimates on average expected Cigna to earn $1.24 per share.
Total medical membership fell 17 percent to 10 million in the quarter from 12 million a year earlier. Earlier this year, Cigna had predicted a decline in health plan membership as it proceeded with its turnaround.
Cigna also increased its 2004 forecast for profit from continuing operations, excluding items, to between $835 million and $875 million, or $5.95 to $6.25 per share, up from its April forecast of $5.15 to $5.55 per share.
It forecast a third-quarter profit on that basis of $175 million to $195 million, or $1.25 to $1.40 per share.
Analysts on average forecast $1.26 for the third quarter and $5.73 for the year.
While many in the sector have posted healthy profit growth, others, including Health Net Inc and First Health Group, were hurt by unpredictable medical costs.
Shares of Cigna are up 9 percent since the beginning of the year, roughly in the line with the rest of the managed health-care sector.
Shares fell 48 cents to $62.10 on the New York Stock Exchange on Wednesday morning.