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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 2, 1995
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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 October 2, 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 2, 1995 By: /s/ Gary A. Swords
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Gary A. Swords
Vice President and
Chief Accounting Officer
Index to Exhibits
<TABLE>
<CAPTION>
Number Description Method of Filing
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<S> <C> <C>
20 CIGNA Corporation Filed herewith.
news release dated
October 2, 1995
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NEWS RELEASE
[CIGNA LOGO]
EXHIBIT 20
For Release: IMMEDIATE One Liberty Place
1650 Market Street
P.O. Box 7716
Philadelphia, PA 19192-1550
(215) 761-1000
Contact: Michael J. Monroe, Media Relations -- 215-761-6133
Robert W. Sullivan, Financial Relations -- 215-761-6130
CIGNA CORPORATION ANNOUNCES PLANS TO STRENGTHEN
RESERVES BY $1.2 BILLION AND RESTRUCTURE DOMESTIC
PROPERTY AND CASUALTY OPERATIONS
Philadelphia, PA, October 2, 1995 -- CIGNA Corporation announced today that it
will increase net reserves for asbestos and environmental (A&E) claims and
other exposures by $1.2 billion in conjunction with a restructuring of its
domestic property and casualty companies (CIGNA P&C). The reserve actions will
result in a charge to earnings of approximately $750 million (after-tax) in the
third quarter.(1)
The reserve strengthening and restructuring are designed to significantly
reduce the uncertainty associated with A&E exposures, improve operating results
and better position CIGNA P&C for future growth, the Company said. The capital
required to implement the restructuring and reserve strengthening will be
provided by internally available resources.
"These actions position us very well for the future," said Wilson H. Taylor,
CIGNA Chief Executive Officer. "We have addressed the reserve issue for both
asbestos and environmental claims and, at the same time, restructured CIGNA P&C
into two distinct operations -- one concentrating on profitable growth, free of
the uncertainty associated with A&E exposures, and the other ensuring that
policyholder obligations for run-off policies are secure and properly managed.
We believe that this comprehensive approach will contribute to improved future
financial results," he added.
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(1) Third quarter earnings release scheduled for October 31, 1995.
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The $1.2 billion addition to net reserves, which is based on extensive internal
analysis and information developed by two nationally recognized independent
actuarial firms -- Milliman and Robertson, Inc., retained by CIGNA, and
Tillinghast Associates, retained by the Commonwealth of Pennsylvania --
increases CIGNA's total A&E net reserves to approximately $1.9 billion. In the
Company's judgement, these reserves reflect reasonable estimates of its future
asbestos and environmental claims.
The proposed CIGNA P&C restructuring, which is subject to regulatory approval,
will establish two separate holding companies -- one managing the active
ongoing operations and the other responsible for run-off operations, including
asbestos and environmental claims.
The restructuring and reserve plans have been discussed extensively with
CIGNA's domiciliary state regulators and with major rating agencies. CIGNA
expects to obtain regulatory approvals to implement the restructuring plan in
the fourth quarter.
The active company will be comprised of the existing domestic P&C specialist
organization that has been concentrating on profitable niche markets.
Assuming the restructuring plan had been in place on June 30, 1995, the active
domestic P&C operation would have had statutory assets of approximately $5.2
billion. Over the past several years, management has strengthened aggressively
the underwriting quality of these operations; improved the mix of business;
restructured the producer force; reduced exposures to major catastrophes; and
significantly reduced expenses. As announced earlier, a charge of
approximately $75 million (pre-tax) will be taken in the third quarter to
reflect additional planned cost reduction initiatives.
"The active operation will have a strong balance sheet, appropriate reserves
and excellent profit potential," said Gerald A. Isom, President of CIGNA P&C.
"Further, we are committed to providing superior service at competitive prices
in our selected markets. Our run-off operation is very well capitalized and
very strongly staffed."
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The active domestic P&C operation will continue to have three primary profit
centers: Special Risk Facilities, which focuses on U.S.-based large risks;
Specialty Insurance Services, which serves clients that have unique or
specialized needs; and Commercial Insurance Services, which specializes in
serving segments of the standard commercial market.
Assuming the effect of the restructuring plan, as of June 30, 1995, the
inactive operation would have had statutory assets of approximately $7.0
billion, which would be sufficient to cover future claims, including asbestos
and environmental, CIGNA said. "In addition to a sound financial position, the
run-off operation has a strong management team focused on meeting the
obligations to policyholders, handling claims and settlements, identifying and
controlling exposures, collecting reinsurance and other recoverables, and
conserving and enhancing its asset base," Mr. Isom added. The run-off
operations will no longer accept new business.
CIGNA Corporation had consolidated assets of approximately $92 billion and
shareholder equity of approximately $6.8 billion as of June 30, 1995. CIGNA's
businesses rank among the largest health care, insurance and financial services
organizations in the United States, and also include one of the largest
U.S.-based international insurance organizations.
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