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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 10, 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 February 10, 1995, A.M. Best Company, Inc. (Best) upgraded to A-
(fourth of 15 ratings) its rating of four of CIGNA's domestic property and
casualty insurance subsidiaries that had formerly constituted part of a larger
pool of B++ (fifth of 15) rated companies. Best stated that the A- rating is
"under review with developing implications". Best also downgraded to B+ (sixth
of 15) its rating of the remaining subsidiaries in the pool and of two
subsidiaries that fully reinsure with the pool. The B+ rating is "under review
with negative implications". Best characterizes the A- rating as "excellent"
and the B+ rating as "very good". Both ratings are in Best's "secure"
category and are expected to be re-evaluated mid-year 1995. CIGNA does not
expect the effect of the downgrade to be material to its results of operations,
liquidity or financial condition.
On February 13, 1995, the registrant issued a news release regarding
its fourth quarter and year-end 1994 results, 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.
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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, 1995 By: /s/ Gary A. Swords
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Gary A. Swords
Vice President and
Chief Accounting Officer
Index to Exhibits
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Number Description Method of Filing
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20 CIGNA Corporation Filed herewith.
news release dated
February 13, 1995
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[CIGNA NEWS RELEASE LETTERHEAD]
EXHIBIT 20
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 1994 RESULTS
PHILADELPHIA, FEBRUARY 13, 1995 -- CIGNA Corporation (NYSE:CI) today reported
fourth quarter 1994 consolidated net income of $182 million ($2.52 per share),
compared with $194 million ($2.70 per share) a year ago. Fourth quarter 1993
results included realized investment gains of $102 million, primarily related
to investment portfolio restructuring activities. For full year 1994,
consolidated net income was $554 million ($7.66 per share), compared with $234
million ($3.25 per share) in 1993.
OPERATING INCOME*
Operating income for the fourth quarter and full year 1994 improved
significantly over comparable periods of 1993. The fourth quarter 1994
operating income was $184 million, double the $92 million reported in 1993.
For full year 1994, operating income was $526 million versus $10 million in
1993.
"The health, pension and life businesses together produced strong operating
income in 1994 and are well positioned for 1995. Although still weak, results
for the property and casualty operations, excluding asbestos and environmental
losses, showed continued improvement throughout the year. Overall property and
casualty performance, including asbestos and environmental losses, remained
poor in 1994," said Bill Taylor, CIGNA's Chief Executive Officer.
* Operating income is defined as net income excluding realized investment gains
and losses.
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REALIZED GAINS/LOSSES
The 1994 fourth quarter consolidated net income included after-tax realized
investment losses of $2 million ($0.02 per share), compared with gains of $102
million ($1.42 per share) for the same period of 1993. For full year 1994,
consolidated net income included after-tax realized investment gains of $28
million ($0.39 per share), compared with gains of $224 million ($3.11 per
share) for the full year 1993.
REVENUES
Consolidated revenues for the fourth quarter of 1994 were $4.7 billion,
compared with $4.9 billion for the same period in 1993. Consolidated revenues
were $18.4 billion for both 1994 and 1993.
ASSETS/SHAREHOLDERS' EQUITY
Assets at December 31, 1994 were approximately $86 billion, compared with
approximately $85 billion at year-end 1993. Shareholders' equity was $5.8
billion ($80.46 per share) at December 31, 1994, compared with $6.6 billion
($91.30 per share) at December 31, 1993. The 1994 decrease in Shareholders'
equity reflects the mark to market requirement of accounting pronouncement SFAS
115, which reduced the unrealized appreciation of fixed maturities carried at
fair value by approximately $1.1 billion due to the upward movement in interest
rates.
SEGMENT RESULTS:
EMPLOYEE LIFE AND HEALTH BENEFITS
This segment, which includes CIGNA's HMO and indemnity operations, had
operating income of $150 million in the fourth quarter of 1994. This compares
with operating income of $155
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million in the fourth quarter of 1993. For 1994, operating income was
$531 million, compared with $463 million in 1993.
For full year 1994, operating income reflected improvements in both the HMO and
indemnity operations. The 1994 HMO earnings increased 44%, primarily due to
strong membership growth, favorable medical cost experience and rate increases.
HMO medical membership grew by 623,000 covered lives, or 23% in 1994.
Indemnity improvements reflected improved results in group life and medical
businesses.
EMPLOYEE RETIREMENT AND SAVINGS BENEFITS
This segment, which operates in the defined benefit and defined contribution
markets, had operating income of $48 million in the fourth quarter of 1994.
This compares with operating income of $44 million in the fourth quarter of
1993. For 1994, operating income was $184 million, compared with $182 million
in 1993.
The increase in operating income for full year 1994 primarily reflected
improved interest margins on the defined contribution business.
Assets under management at December 31, 1994 were $33.9 billion, a decrease of
2% from $34.5 billion as of December 31, 1993, reflecting a decline of $750
million due to SFAS 115.
INDIVIDUAL FINANCIAL SERVICES
This segment, which includes individual and corporate-owned life insurance,
life and health reinsurance, and annuity businesses, had operating income of
$35 million in the fourth quarter
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of 1994. This compares with operating income of $33 million in the fourth
quarter of 1993. For 1994, operating income was $131 million, compared with
$123 million in 1993.
The operating income increase for full year 1994 primarily reflected higher
earnings from interest-sensitive products due to improved interest margins and
business growth.
PROPERTY AND CASUALTY
The property and casualty (P&C) segment had an operating loss of $6 million for
the fourth quarter of 1994. This compares with an operating loss of $124
million for the fourth quarter of 1993. For 1994, operating losses were $239
million, compared with losses of $680 million in 1993. For full year 1993,
operating losses included $97 million after-tax for restructuring charges and a
$221 million after-tax provision for future asbestos and environmental (A&E)
litigation expenses.
Excluding A&E losses, P&C reported operating income of $55 million in the
fourth quarter of 1994, compared with an operating loss of $80 million for the
same period in 1993 and for the full year 1994, an operating loss of $60
million, compared with a loss of $313 million in 1993. For full year 1994, P&C
results, excluding A&E, reflect the return to profitability for two businesses.
The International division had operating income for 1994 of $43 million
compared with a loss of $38 million in 1993, and the Special Risk unit of the
Domestic operation reported income of $37 million for 1994, compared with a
loss of $49 million in 1993.
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The A&E losses in the fourth quarter of 1994 were $61 million, compared with
losses of $44 million in 1993. For full year 1994, A&E losses were $179
million, compared with losses of $367 million in 1993.
The fourth quarter and full year of 1994 included after-tax catastrophe losses
of $3 million and $98 million, respectively. This compares with losses of $7
million and $94 million for the respective periods of 1993.
Excluding A&E losses, the GAAP combined ratio after policyholders' dividends
was 110 and 117 for the fourth quarter and full year of 1994, compared with 126
and 124 for the comparable periods of 1993.
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 $43
million in the fourth quarter of 1994. This compares with an operating loss of
$16 million in the fourth quarter of 1993. The fourth quarter 1994 loss
reflects a charge of $16 million after-tax resulting from reserve strengthening
for settlement annuity business and a loss of $8 million after-tax for an oil
and gas divestiture.
For 1994, the operating loss was $81 million, compared with a loss of $78
million in 1993.
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<TABLE>
<CAPTION>
CIGNA CORPORATION
COMPARATIVE SUMMARY OF FINANCIAL RESULTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS) [LOGO]
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THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1994 1993 1994 1993
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<S> <C> <C> <C> <C>
REVENUES
Premiums and fees $ 3,605 $ 3,660 $ 13,912 $ 13,712
Net investment income 1,006 1,024 3,946 3,902
Other revenues 120 127 492 506
Realized investment gains (losses) (8) 129 42 282
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Total $ 4,723 $ 4,940 $ 18,392 $ 18,402
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OPERATING INCOME (LOSS) BY SEGMENT*
Employee Life and Health Benefits:
Indemnity $ 105 $ 120 $ 327 $ 321
HMOs 45 35 204 142
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150 155 531 463
Employee Retirement and Savings Benefits 48 44 184 182
Individual Financial Services 35 33 131 123
Property and Casualty
Operations 55 (80) (60) (313)
Asbestos and Environmental Losses (61) (44) (179) (367)
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Total Property and Casualty (6) (124) (239) (680)
Other Operations (43) (16) (81) (78)
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Total ** $ 184 $ 92 $ 526 $ 10
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NET INCOME (LOSS) BY SEGMENT
Employee Life and Health Benefits $ 161 $ 234 $ 548 $ 589
Employee Retirement and Savings Benefits 48 43 190 159
Individual Financial Services 36 31 136 110
Property and Casualty:
Operations 42 (42) (56) (163)
Asbestos and Environmental Losses (61) (44) (179) (367)
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Total Property and Casualty (19) (86) (235) (530)
Other Operations (44) (28) (85) (94)
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Total ** $ 182 $ 194 $ 554 $ 234
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SHAREHOLDERS' EQUITY at December 31 $ 5,811 $ 6,575
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WEIGHTED AVERAGE SHARES
OUTSTANDING (thousands) 72,315 72,101 72,317 72,022
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PER SHARE:
Operating income* $ 2.54 $ 1.28 $ 7.27 $ 0.14
After-tax realized investment gains (losses) (0.02) 1.42 0.39 3.11
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Net income $ 2.52 $ 2.70 $ 7.66 $ 3.25
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Shareholders' Equity at December 31 $ 80.46 $ 91.30
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PROPERTY AND CASUALTY
STATISTICS (GAAP)
Net written premiums $ 987 $ 1,076 $ 3,950 $ 4,229
Earned premiums $ 1,034 $ 1,112 $ 4,126 $ 4,358
Underwriting ratios:
Loss and loss adjustment expense 78.9% 89.9% 86.3% 97.6%
Underwriting expense 34.4% 37.5% 35.4% 36.8%
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Combined ratio 113.3% 127.4% 121.7% 134.4%
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Combined after policyholders' dividends 118.6% 131.9% 123.9% 137.4%
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Pre-tax catastrophe losses $ 5 $ 11 $ 151 $ 145
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</TABLE>
* Operating income is defined as net income excluding after-tax realized
investment results.
** Full year 1993 includes after-tax charges in the Property and Casualty
segment of $97 million for restructuring and $221 million for future
asbestos and environmental litigation expenses.
