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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) FEBRUARY 14, 1994
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CIGNA CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-8323 06-1059331
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
ONE LIBERTY PLACE, 1650 MARKET STREET, P.O. BOX 7716
PHILADELPHIA, PENNSYLVANIA 19192-1550
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(215) 761-1000
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
On February 14, 1994, the registrant issued a press release, a copy of
which is filed as Exhibit 21 hereto and is incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits accompanying this report are listed in the
Index to Exhibits below.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CIGNA CORPORATION
Date: February 14, 1994 By: /s/ Gary A. Swords
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Gary A. Swords
Vice President and
Chief Accounting Officer
Index to Exhibits
Method of Sequential
Number Description Filing Page No.
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21 CIGNA Corporation Filed herewith.
press release dated
February 14, 1994
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Exhibit 21
[CIGNA NEWS RELEASE LETTERHEAD]
For Release: IMMEDIATE
Contact: ROBERT W. SULLIVAN, FINANCIAL RELATIONS - (215) 761-6130
MICHAEL J. MONROE, MEDIA RELATIONS - (215) 761-6133
CIGNA'S FOURTH QUARTER AND YEAR-END 1993 RESULTS
PHILADELPHIA, FEBRUARY 14, 1994 -- CIGNA Corporation (NYSE:CI) today
reported fourth quarter 1993 consolidated net income of $194 million ($2.70 per
share), compared with $50 million ($0.70 per share) a year ago. For full year
1993, consolidated net income was $234 million ($3.25 per share). This
compares with $311 million ($4.34 per share) a year ago.
OPERATING INCOME*
Operating income for the fourth quarter of 1993 improved over the comparable
period of 1992. The fourth quarter 1993 operating income was $92 million
versus $31 million in 1992. For full year 1993, operating income was $10
million versus $145 million in 1992. Absent the referenced adjustments noted
below, the fourth quarter 1993 operating income was $92 million versus $41
million in 1992, and for the full year 1993 was $320 million versus $158
million in 1992.
"The operating income for our health, pension and life businesses was very
strong in the quarter and for the year. Property and casualty results were
poor. We have taken a number of actions during the year to restructure the
property and casualty business and expect that they will lead to improvements
in future results," said Wilson H. Taylor, CIGNA's Chief Executive Officer.
* Operating income is defined as net income excluding realized investment gains
and losses and the cumulative effect of accounting changes.
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NET INCOME
The 1993 net income includes a $244 million after-tax charge for asbestos and
environmental legal expenses and a $107 million after-tax restructuring charge
affecting mostly the Property and Casualty segment in the third quarter. The
1992 net income included a $140 million net after-tax charge for London
reinsurance exposures and a $182 million benefit from resolution of certain
federal tax audit issues. For further detail of these and other specific
adjustments in 1993 and 1992, see the supplemental information page. The
following discussions of segment operating results exclude these adjustments.
REALIZED GAINS/LOSSES
The 1993 fourth quarter and full year consolidated net income includes
after-tax realized investment gains of $102 million ($1.42 per share) and $224
million ($3.11 per share), respectively, compared with gains of $19 million
($0.27 per share) and $192 million ($2.68 per share) in the same periods of
1992.
REVENUES
Consolidated revenues were $4.9 billion and $4.8 billion for the fourth quarter
of 1993 and 1992, respectively. For the full year of 1993, consolidated
revenues were $18.4 billion, compared with $18.6 billion in 1992.
ASSETS/SHAREHOLDERS' EQUITY
Assets at the end of 1993 were $84.9 billion, up from $77.7 billion at year-end
1992. Shareholders' equity was $6.6 billion ($91.12 per share) at December 31,
1993, compared with $5.7 billion ($80.09 per share) at December 31, 1992. In
the fourth quarter of 1993, investment
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assets and shareholders' equity increased approximately $1.6 billion and $900
million, respectively, due to the adoption of SFAS 115, which requires certain
securities to be carried at fair value versus amortized cost.
SEGMENT RESULTS:
EMPLOYEE LIFE AND HEALTH BENEFITS
This segment, which includes CIGNA's group indemnity and HMO operations, had
operating income of $155 million in the fourth quarter of 1993. This compares
with operating income of $115 million in the fourth quarter of 1992. For full
year 1993, operating income was $464 million, compared with $327 million in
1992.
For the full year 1993, the operating income increase reflects improvements in
both the group indemnity and HMO operations. Indemnity improvements were due
to sound underwriting execution and favorable claim experience. The HMO
improvements were attributable to strong membership growth, rate increases and
medical cost management; HMO medical membership grew by 400,000 covered lives,
or 18%, in 1993.
EMPLOYEE RETIREMENT AND SAVINGS BENEFITS
This segment, which manages retirement accounts, had operating income of $44
million for both the fourth quarter of 1993 and 1992. For full year 1993,
operating income was $175 million, compared with $173 million in 1992.
Assets under management at December 31, 1993 were $34.4 billion, an increase of
5 percent from $32.7 billion as of December 31, 1992. Approximately $500
million of this increase resulted
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from the adoption of SFAS 115. Operating income growth for 1993 principally
reflects the growth in managed assets.
INDIVIDUAL FINANCIAL SERVICES
This segment, which includes individual and corporate-owned life insurance as
well as annuity businesses, had operating income of $33 million in the fourth
quarter of 1993. This compares with operating income of $24 million in the
fourth quarter of 1992. For full year 1993, operating income was $115 million,
compared with $82 million in 1992.
The operating income increase for 1993 reflects improved margins and higher
sales on interest-sensitive products.
PROPERTY AND CASUALTY
This segment, which includes Domestic, International and Reinsurance
operations, had an operating loss of $124 million in the fourth quarter of
1993. This compares with an operating loss of $115 million for the fourth
quarter of 1992. For the full year 1993, the operating loss was $350 million,
compared with a loss of $351 million in 1992.
Operating results continue to be adversely affected by the highly competitive
commercial pricing environment.
The fourth quarter and full year 1993 included pre-tax catastrophe losses of
$11 million and $145 million, respectively. This compares with losses of $59
million and $251 million for the
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respective periods of 1992, including $151 million for Hurricanes Andrew and
Iniki in full year 1992.
The GAAP combined operating ratio after policyholders' dividends was 132 and
137 for the fourth quarter and full year 1993, compared with 128 and 131 for
the respective periods of 1992. Excluding the referenced adjustments, the
combined ratios for the full year 1993 and 1992 were 128 and 126, respectively.
1994 Catastrophe Experience
Relative to recent catastrophes, CIGNA's Property and Casualty segment's
preliminary estimate of losses from the Los Angeles earthquake total
approximately $60 million (after-tax) and for the severe January weather are
approximately $25 million (after-tax). Losses from these catastrophes will be
recorded in the first quarter of 1994.
OTHER
Other Operations, which includes unallocated investment income, expenses and
taxes, as well as the results of CIGNA's investment and real estate
subsidiaries and settlement annuity business, had an operating loss of $16
million in the fourth quarter of 1993. This compares with an operating loss of
$27 million in the fourth quarter of 1992. For the full year 1993, operating
losses were $84 million, compared with a loss of $73 million in 1992.
For further financial information on the fourth quarter and year-end 1993
results, see attached.
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CIGNA CORPORATION
COMPARATIVE SUMMARY OF FINANCIAL RESULTS
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Three Months Ended Twelve Months Ended
December 31, December 31,
1993 1992 1993 1992
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<S> <C> <C> <C> <C>
REVENUES
Premiums and fees $ 3,660 $ 3,657 $ 13,712 $ 13,924
Net investment income 1,024 981 3,902 3,914
Other revenues 127 141 506 579
Realized investment gains 129 12 282 165
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Total $ 4,940 $ 4,791 $ 18,402 $ 18,582
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INCOME (LOSS) BY SEGMENT
Employee Life and Health Benefits $ 234 $ 129 $ 589 $ 483
Employee Retirement and Savings Benefits 43 44 159 216
Individual Financial Services 31 21 110 86
Property and Casualty (86) (120) (530) (374)
Other Operations (28) (24) (94) (74)
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INCOME BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGES 194 50 234 337
Cumulative effect of accounting changes - - - (26)
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NET INCOME $ 194 $ 50 $ 234 $ 311
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SHAREHOLDERS' EQUITY at December 31 $ 6,562 $ 5,744
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WEIGHTED AVERAGE SHARES
OUTSTANDING (thousands) 72,101 71,791 72,022 71,737
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PER SHARE:
Income before cumulative effect
of accounting changes $ 2.70 $ 0.70 $ 3.25 $ 4.70
Cumulative effect of accounting changes - - - (0.36)
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Net income $ 2.70 $ 0.70 $ 3.25 $ 4.34
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Shareholders' Equity at December 31 $ 91.12 $ 80.09
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PROPERTY AND CASUALTY
STATISTICS (GAAP)
Net written premiums $ 1,076 $ 1,217 $ 4,229 $ 4,817
Earned premiums $ 1,112 $ 1,313 $ 4,358 $ 5,132
Underwriting ratios:
Loss and loss adjustment expense 89.9% 97.0% 97.6% 99.5%
Underwriting expense 37.5% 32.7% 36.8% 32.0%
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Combined ratio 127.4% 129.7% 134.4% 131.5%
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Combined after policyholders' dividends 131.9% 128.3% 137.4% 131.3%
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Pre-tax catastrophe losses $ 11 $ 59 $ 145 $ 251
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</TABLE>
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CIGNA CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
FINANCIAL DATA EXCLUDING SPECIFIC ADJUSTMENTS - RESULTS OF OPERATIONS
(Dollars in millions, except per share amounts)
For informational purposes, the following information presents the effects of
the items noted below on published results of operations. The information
presented in this manner does not conform with Generally Accepted Accounting
Principles.
<TABLE>
<CAPTION>
Employee Life & Health Benefits
Indemnity HMOs Total
1993 1992 1993 1992 1993 1992
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<S> <C> <C> <C> <C> <C> <C>
Three Months Ended December 31,
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Operating income (loss) as published * $120 $87 $35 $24 $155 $111
After-tax realized investment gains (losses) 79 18 - - 79 18
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Net income (loss) $199 $105 $35 $24 $234 $129
==================================================================================================================
Year Ended December 31,
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Operating income (loss) before adjustments $315 $243 $149 $84 $464 $327
3rd qtr. asbestos / environ. litigation expenses - - - - - -
Restructuring charges (5) (5) (5) (10) (10) (15)
Federal income tax rate change ** 12 - 2 - 14 -
London reinsurance exposures - - - - - -
Tax audits (1) 114 (4) (6) (5) 108
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Operating income (loss) as published 321 352 142 68 463 420
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After-tax realized investment gains
(losses) before adjustments 128 63 - - 128 63
Tax audits (2) - - - (2) -
After-tax realized investment gains ------------------------------------------------------
(losses) as published 126 63 - - 126 63
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Income (loss) before cumulative effect
of accounting changes $447 $415 $142 $68 $589 $483
==================================================================================================================
</TABLE>
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<TABLE>
<CAPTION>
Employee Individual
Retirement & Financial Property &
Savings Benefits Services Casualty
1993 1992 1993 1992 1993 1992
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<S> <C> <C> <C> <C> <C> <C>
Three Months Ended December 31,
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Operating income (loss) as published * $44 $44 $33 $24 ($124) ($121)
After-tax realized investment gains (losses) (1) - (2) (3) 38 1
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Net income (loss) $43 $44 $31 $21 ($86) ($120)
==================================================================================================================
Year Ended December 31,
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Operating income (loss) before adjustments $175 $173 $115 $82 ($350) ($351)
3rd qtr. asbestos / environ. litigation expenses - - - - (244) -
Restructuring charges - - - - (97) (16)
Federal income tax rate change ** 1 - 3 - 24 -
London reinsurance exposures - - - - (16) (140)
Tax audits 6 27 5 4 3 22
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Operating income (loss) as published 182 200 123 86 (680) (485)
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After-tax realized investment gains
(losses) before adjustments (20) 2 (12) (10) 150 111
Tax audits (3) 14 (1) 10 - -
After-tax realized investment gains --------------------------------------------------------
(losses) as published (23) 16 (13) - 150 111
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Income (loss) before cumulative effect
of accounting changes $159 $216 $110 $86 ($530) ($374)
==================================================================================================================
</TABLE>
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<TABLE>
<CAPTION>
Earnings
Other Consolidated Per Share
1993 1992 1993 1992 1993 1992
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<S> <C> <C> <C> <C> <C> <C>
Three Months Ended December 31,
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Operating income (loss) as published * ($16) ($27) $92 $31 $1.28 $0.43
After-tax realized investment gains (losses) (12) 3 102 19 1.42 0.27
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Net income (loss) ($28) ($24) $194 $50 $2.70 $0.70
==================================================================================================================
Year Ended December 31,
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Operating income (loss) before adjustments ($84) ($73) $320 $158 $4.45 $2.20
3rd qtr. asbestos / environ. litigation expenses - - (244) - (3.39) -
Restructuring charges - - (107) (31) (1.49) (0.43)
Federal income tax rate change ** 6 - 48 - 0.67 -
London reinsurance exposures - - (16) (140) (0.22) (1.95)
Tax audits - (3) 9 158 0.12 2.20
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Operating income (loss) as published (78) (76) 10 145 0.14 2.02
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After-tax realized investment gains
(losses) before adjustments (16) 2 230 168 3.19 2.34
Tax audits - - (6) 24 (0.08) 0.34
After-tax realized investment gains -------------------------------------------------------
(losses) as published (16) 2 224 192 3.11 2.68
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Income (loss) before cumulative effect
of accounting changes ($94) ($74) $234 $337 $3.25 $4.70
==================================================================================================================
</TABLE>
* Amounts for 1992 include a restructuring charge of $10 million after-tax
($4 million for HMOs and $6 million for Property and Casualty).
** As a result of the increase in the federal corporate income tax rate to
35%, during the third quarter, CIGNA recorded a $48 million tax benefit
reflecting the effect of the tax rate increase on its net deferred tax
asset (DTA).
