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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) OCTOBER 31, 1995
----------------
CIGNA CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-8323 06-1059331
-------- ------ ----------
(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 October 31, 1995, the registrant issued a news release, a copy of
which is filed as Exhibit 20 hereto and is incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(c) The exhibit accompanying this report is 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: October 31, 1995 By: /s/ Gary A. Swords
------------------------
Gary A. Swords
Vice President and
Chief Accounting Officer
Index to Exhibits
-----------------
Number Description Method of Filing
- ------ ----------- ----------------
20 CIGNA Corporation Filed herewith.
news release dated
October 31, 1995
-2-
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[CIGNA NEWS RELEASE LETTERHEAD]
EXHIBIT 20
For Release: IMMEDIATE
ROBERT W. SULLIVAN, FINANCIAL RELATIONS - (215) 761-6130
Contact: MICHAEL J. MONROE, MEDIA RELATIONS - (215) 761-6133
CIGNA'S THIRD QUARTER 1995 RESULTS
PHILADELPHIA, OCTOBER 31, 1995 -- CIGNA Corporation (NYSE:CI) today reported
third quarter 1995 operating income* of $270 million, or $3.70 per share,
before an $849 million after-tax adjustment for asbestos and environmental
(A&E) net reserve, cost reduction and unrecoverable reinsurance charges. This
compares with third quarter 1994 operating income, excluding adjustments, of
$149 million, or $2.06 per share. Third quarter 1995 operating income includes
no A&E charges as compared to $42 million of such charges in the third quarter
of 1994. Including the referenced adjustments, third quarter 1995 operating
losses were $579 million, or a loss of $7.94 per share, compared with operating
income of $122 million, or $1.69 per share in 1994.
"CIGNA's third quarter 1995 operating results, before adjustments, continue to
demonstrate solid progress, primarily reflecting the improvement in our
Property and Casualty business. The significant reserve strengthening and cost
reduction actions taken during the quarter position us for further improvements
in operating results," said Wilson H. Taylor, CIGNA's Chief Executive Officer.
* Operating income (loss) is defined as net income (loss) excluding realized
investment gains and losses.
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Operating income for the nine months of 1995, before adjustments, was $605
million, or $8.33 per share, compared with $369 million, or $5.10 per share, in
1994. Including adjustments, the operating loss for the nine months of 1995
was $244 million, or a loss of $3.36 per share, compared with operating income
of $342 million, or $4.73 per share in 1994.
The third quarter and nine months of 1995 reflect a $774 million after-tax
charge for strengthening net reserves for A&E claims and unrecoverable
reinsurance. The A&E actions will significantly reduce future charges for
these exposures in the Property and Casualty segment.
The Property and Casualty and Employee Life & Health Benefits segments reported
after-tax cost reduction charges of $55 million and $20 million, respectively,
in the third quarter and nine months of 1995, primarily for severance and other
related expenses. These actions are expected to reduce future operating
expenses, primarily payroll-related, in each segment.
Results for the third quarter and nine months of 1994 included a $26 million
after-tax charge for property and casualty reinsurance reserve strengthening
and a $9 million after-tax charge for CIGNA's withdrawal from the property and
casualty reinsurance business.
Further information on the third quarter and nine months of 1995 and 1994,
before and after adjustments, is provided on the attached supplemental
financial information page.
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THE FOLLOWING SEGMENT DISCUSSIONS OF OPERATING RESULTS EXCLUDE THESE
ADJUSTMENTS.
SEGMENT RESULTS:
EMPLOYEE LIFE AND HEALTH BENEFITS
This segment, which includes CIGNA's HMO and indemnity operations, had
operating income of $136 million in the third quarter of 1995. This compares
with operating income of $132 million in the third quarter of 1994. For the
nine months of 1995, operating income was $369 million, compared with $381
million in 1994.
HMO medical membership grew by approximately 378,000 covered lives or 11% since
year end 1994 and by 476,000 covered lives or 14% since September 30, 1994.
EMPLOYEE RETIREMENT AND SAVINGS BENEFITS
This segment, which operates in the defined contribution and defined benefit
pension markets, had operating income of $48 million in the third quarter of
1995. This compares with operating income of $46 million in the third quarter
of 1994. For the nine months of 1995, operating income was $143 million,
compared with $138 million in 1994.
Assets under management at September 30, 1995 were $37.2 billion, an increase
of 9% from $34.3 billion as of September 30, 1994.
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INDIVIDUAL FINANCIAL SERVICES
This segment, which includes individual and corporate-owned life insurance;
life, accident and health reinsurance; and annuity businesses, had operating
income of $36 million in the third quarter of 1995, compared with $33 million
in the third quarter of 1994. For the nine months of 1995, operating income
was $112 million, compared with $96 million in 1994.
PROPERTY AND CASUALTY
The property and casualty (P&C) segment had operating income of $66 million for
the third quarter of 1995. This compares with an operating loss of $45 million
for the third quarter of 1994. Third quarter 1995 results include no charges
for A&E, while the third quarter of 1994 includes A&E charges of $42 million.
For the nine months of 1995, operating income was $35 million, compared with a
loss of $206 million in 1994.
The International division had operating income for the third quarter of 1995
of $34 million, compared with $17 million in 1994. The Domestic division had
income of $31 million for the third quarter of 1995, compared with a loss of
$17 million in 1994.
The GAAP combined ratio after policyholders' dividends for the International
and Domestic divisions in the third quarter of 1995 was 93 and 116,
respectively. The consolidated GAAP combined ratio after policyholders'
dividends was 106 and 115 for the third quarter and nine months of 1995,
compared with 119 and 125 for the comparable periods of 1994.
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The third quarter and nine months of 1995 included pre-tax catastrophe losses
of $8 million and $59 million, respectively. This compares with catastrophe
losses of $11 million and $146 million for the respective periods 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 third quarter of 1995. This compares with an operating loss of
$17 million in the third quarter of 1994. For the nine months of 1995, the
operating loss was $54 million, compared with $40 million in 1994. The nine
months of 1994 included a $20 million after-tax gain from the sale of a
business.
NET INCOME (LOSS)
Consolidated net income for the quarter, before the noted adjustments, was $283
million ($3.88 earnings per share), compared with $151 million ($2.08 per
share) a year ago. For the nine months of 1995, consolidated net income was
$778 million ($10.71 per share), compared with $400 million ($5.52 per share) a
year ago. Including the adjustments, the net loss for the quarter was $566
million ($7.76 per share), compared with income of $123 million ($1.70 per
share) a year ago. For the nine months of 1995, the consolidated net loss,
including the adjustments, was $71 million ($0.98 per share), compared with
income of $372 million ($5.14 per share) a year ago.
The 1995 third quarter consolidated results included after-tax realized
investment gains of $13 million ($0.18 per share), compared with gains of $1
million ($0.01 per share) for the same
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period of 1994. The nine months of 1995 consolidated net income included
after-tax realized investment gains of $173 million ($2.38 per share) compared
with gains of $30 million ($.41 per share) for the same period of 1994. The
significant investment gains in the nine months of 1995 reflect the effects of
restructuring several portfolios.
REVENUES
Consolidated revenues for the third quarter of 1995 and 1994 were $4.6 billion.
For the nine months of 1995, consolidated revenues were $14.1 billion versus
$13.7 billion in 1994.
ASSETS / SHAREHOLDERS' EQUITY
Assets at September 30, 1995 were approximately $94 billion, compared with
approximately $86 billion at year-end 1994. Shareholders' equity was $6.4
billion ($86.38 per share) at September 30, 1995, compared with $5.8 billion
($80.46 per share) at December 31, 1994. The increase in Shareholders' equity
reflects an increase of approximately $725 million in the unrealized
appreciation of fixed maturities carried at fair value, due to the downward
movement of interest rates.
REDEMPTION OF CONVERTIBLE SUBORDINATED DEBENTURES
In late September 1995, CIGNA announced the redemption of all outstanding 8.20%
convertible subordinated debentures due July 10, 2010. Shareholders' equity
per share at September 30, 1995, assuming full conversion of the debentures,
would have been $83.75 per share. Assuming full conversion for the third
quarter of 1995, operating income, excluding the noted adjustments, would have
been $3.57 per share.
###
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CIGNA CORPORATION
COMPARATIVE SUMMARY OF FINANCIAL RESULTS
(Dollars in millions, except per share amounts) [CIGNA LOGO]
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
------------- ------------ -------------- ---------------
<S> <C> <C> <C> <C>
REVENUES
Premiums and fees $ 3,408 $ 3,497 $ 10,340 $ 10,307
Net investment income 1,080 980 3,192 2,940
Other revenues 134 117 391 372
Realized investment gains 20 6 226 50
------------ ------------ ------------ ------------
Total $ 4,642 $ 4,600 $ 14,149 $ 13,669
============ ============ ============ ============
OPERATING INCOME (LOSS) BY SEGMENT*
Employee Life and Health Benefits:
Indemnity $ 78 $ 82 $ 204 $ 222
HMOs 38 50 145 159
------------ ------------ ------------ ------------
116 132 349 381
Employee Retirement and Savings
Benefits 48 44 143 136
Individual Financial Services 36 33 112 96
Property and Casualty:
Domestic (68) (6) (40) (84)
International 34 13 76 20
Other, primarily reinsurance (43) (37) (43) (51)
------------ ------------ ------------ ------------
Operations (77) (30) (7) (115)
Asbestos and Environmental Losses (686) (42) (787) (118)
------------ ------------ ------------ ------------
Total Property and Casualty (763) (72) (794) (233)
Other Operations (16) (15) (54) (38)
------------ ------------ ------------ ------------
Total $ (579) $ 122 $ (244) $ 342
============ ============ ============ ============
NET INCOME (LOSS) BY SEGMENT
Employee Life and Health Benefits $ 117 $ 126 $ 450 $ 387
Employee Retirement and Savings
Benefits 48 47 145 142
Individual Financial Services 37 31 112 100
Property and Casualty:
Domestic (65) (4) 12 (73)
International 38 15 79 28
Other, primarily reinsurance (43) (38) (44) (53)
------------ ------------ ------------ ------------
Operations (70) (27) 47 (98)
Asbestos and Environmental Losses (686) (42) (787) (118)
------------ ------------ ------------ ------------
Total Property and Casualty (756) (69) (740) (216)
Other Operations (12) (12) (38) (41)
------------ ------------ ------------ ------------
Total $ (566) $ 123 $ (71) $ 372
============ ============ ============ ============
SHAREHOLDERS' EQUITY AT SEPTEMBER 30 $ 6,394 $ 5,900
============ ============
WEIGHTED AVERAGE SHARES
OUTSTANDING (THOUSANDS) 72,908 72,354 72,561 72,318
============ ============ ============ ============
EARNINGS PER SHARE:
Operating income (loss)* $ (7.94) $ 1.69 $ (3.36) $ 4.73
After-tax realized investment gains 0.18 0.01 2.38 0.41
------------ ------------ ------------ ------------
Net income (loss) $ (7.76) $ 1.70 $ (0.98) $ 5.14
============ ============ ============ ============
Shareholders' equity per share at
September 30 $ 86.38 $ 81.68
============ ============
</TABLE>
* Operating income is defined as net income excluding after-tax realized
investment results.
<PAGE> 8
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
THREE MONTHS ENDED SEPTEMBER 30, 1995 1994 1995 1994 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Operating income (loss) before adjustments $87 $81 $49 $51 $136 $132
Asbestos/environmental charge - - - - - -
Cost reduction charges (9) - (11) - (20) -
Reinsurance charges - - - - - -
Tax audits - 1 - (1) - -
---- ---- ---- ---- ---- ----
Operating income (loss) as published 78 82 38 50 116 132
---- ---- ---- ---- ---- ----
After-tax realized investment gains (losses)
before adjustments 1 (6) - - 1 (6)
Tax audits - - - - - -
---- ---- ---- ---- ---- ----
After-tax realized investment gains (losses)
as published 1 (6) - - 1 (6)
---- ---- ---- ---- ---- ----
Net income (loss) $79 $76 $38 $50 $117 $126
==== ==== ==== ==== ==== ====
</TABLE>
<TABLE>
Caption>
EMPLOYEE INDIVIDUAL
RETIREMENT & FINANCIAL PROPERTY &
SAVINGS BENEFITS SERVICES CASUALTY
THREE MONTHS ENDED SEPTEMBER 30, 1995 1994 1995 1994 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Operating income (loss) before adjustments $48 $46 $36 $33 $66 * ($45)*
Asbestos/environmental charge - - - - (686) -
Cost reduction charges - - - - (55) (9)
Reinsurance charges - - - - (88) (26)
Tax audits - (2) - - - 8
---- ---- ---- ---- ---- ----
Operating income (loss) as published 48 44 36 33 (763) (72)
---- ---- ---- ---- ---- ----
After-tax realized investment gains (losses)
before adjustments - 4 1 (2) 7 3
Tax audits - (1) - - - -
---- ---- ---- ---- ---- ----
After-tax realized investment gains (losses)
as published - 3 1 (2) 7 3
---- ---- ---- ---- ---- ----
Net income (loss) $48 $47 $37 $31 ($756) ($69)
==== ==== ==== ==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
EARNINGS
OTHER CONSOLIDATED PER SHARE
THREE MONTHS ENDED SEPTEMBER 30, 1995 1994 1995 1994 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Operating income (loss) before adjustments ($16) ($17) $270 $149 $3.70 $2.06
Asbestos/environmental charge - - (686) - (9.41) -
Cost reduction charges - - (75) (9) (1.03) (0.12)
Reinsurance charges - - (88) (26) (1.20) (0.36)
Tax audits - 2 - 8 - 0.11
---- ---- ---- ---- ---- ----
Operating income (loss) as published (16) (15) (579) 122 (7.94) 1.69
---- ---- ---- ---- ---- ----
After-tax realized investment gains (losses)
before adjustments 4 3 13 2 0.18 0.02
Tax audits - - - (1) - (0.01)
---- ---- ---- ---- ---- ----
After-tax realized investment gains (losses)
as published 4 3 13 1 0.18 0.01
---- ---- ---- ---- ---- ----
Net income (loss) ($12) ($12) ($566) $123 ($7.76) $1.70
==== ==== ==== ==== ===== ====
</TABLE>
<TABLE>
<CAPTION>
EMPLOYEE LIFE & HEALTH BENEFITS
------------------------------------------------
INDEMNITY HMOS TOTAL
NINE MONTHS ENDED SEPTEMBER 30, 1995 1994 1995 1994 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Operating income (loss) before adjustments $213 $221 $156 $160 $369 $381
Asbestos/environmental charge - - - - - -
Cost reduction charges (9) - (11) - (20) -
Reinsurance charges - - - - - -
Tax audits - 1 - (1) - -
---- ---- ---- ---- ---- ----
Operating income (loss) as published 204 222 145 159 349 381
---- ---- ---- ---- ---- ----
After-tax realized investment gains (losses)
before adjustments 101 6 - - 101 6
Tax audits - - - - - -
---- ---- ---- ---- ---- ----
After-tax realized investment gains (losses)
as published 101 6 - - 101 6
---- ---- ---- ---- ---- ----
Net income (loss) $305 $228 $145 $159 $450 $387
==== ==== ==== ==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
EMPLOYEE INDIVIDUAL
RETIREMENT & FINANCIAL PROPERTY &
SAVINGS BENEFITS SERVICES CASUALTY
NINE MONTHS ENDED SEPTEMBER 30, 1995 1994 1995 1994 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Operating income (loss) before adjustments $143 $138 $112 $96 $35 * ($206)*
Asbestos/environmental charge - - - - (686) -
Cost reduction charges - - - - (55) (9)
Reinsurance charges - - - - (88) (26)
Tax audits - (2) - - - 8
---- ---- ---- ---- ---- ----
Operating income (loss) as published 143 136 112 96 (794) (233)
---- ---- ---- ---- ---- ----
After-tax realized investment gains (losses)
before adjustments 2 7 - 4 54 17
Tax audits - (1) - - - -
---- ---- ---- ---- ---- ----
After-tax realized investment gains (losses)
as published 2 6 - 4 54 17
---- ---- ---- ---- ---- ----
Net income (loss) $145 $142 $112 $100 ($740) ($216)
==== ==== ==== ==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
EARNINGS
OTHER CONSOLIDATED PER SHARE
NINE MONTHS ENDED SEPTEMBER 30, 1995 1994 1995 1994 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Operating income (loss) before adjustments ($54) ($40) $605 $369 $8.33 $5.10
Asbestos/environmental charge - - (686) - (9.45) -
Cost reduction charges - - (75) (9) (1.03) (0.12)
Reinsurance charges - - (88) (26) (1.21) (0.36)
Tax audits - 2 - 8 - 0.11
---- ---- ---- ---- ---- ----
Operating income (loss) as published (54) (38) (244) 342 (3.36) 4.73
---- ---- ---- ---- ---- ----
After-tax realized investment gains (losses)
before adjustments 16 (3) 173 31 2.38 0.42
Tax audits - - - (1) - (0.01)
---- ---- ---- ---- ---- ----
After-tax realized investment gains (losses)
as published 16 (3) 173 30 2.38 0.41
---- ---- ---- ---- ---- ----
Net income (loss) ($38) ($41) ($71) $372 ($0.98) $5.14
==== ==== ==== ==== ==== ====
</TABLE>
* Amounts include asbestos and environmental losses (other than the third
quarter 1995 asbestos/environmental charge noted in the adjustments) of
$101 million for the nine months of 1995, compared with $42 million and
$118 million for the quarter and nine months of 1994, respectively.
