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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 13, 1996
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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 13, 1996, the registrant issued a news release
regarding its fourth quarter and year-end 1995 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.
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 13, 1996 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
February 13, 1996
</TABLE>
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EXHIBIT 20
[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 1995 RESULTS, EXCLUDING
ADJUSTMENTS, SHOWED STRONG IMPROVEMENTS
PHILADELPHIA, FEBRUARY 13, 1996 -- CIGNA Corporation (NYSE:CI) today reported
fourth quarter 1995 operating income* of $277 million, or $3.62 per share.
This compares with fourth quarter 1994 operating income of $184 million, or
$2.54 per share. Fourth quarter 1995 operating income includes no asbestos and
environmental (A&E) charges as compared to $61 million of such charges in the
fourth quarter of 1994.
For full year 1995, operating income was $882 million ($11.96 per share),
versus $553 million ($7.64 per share) in 1994, excluding several third quarter
adjustments for asbestos and environmental, reinsurance and cost reduction
charges. Including these adjustments, operating income for full year 1995 was
$33 million, or $0.45 per share, compared with operating income of $526
million, or $7.27 per share in 1994.
"CIGNA's 1995 operating results reflect significant underlying earnings
improvement, primarily resulting from improved property and casualty results.
Several significant actions taken in 1995, including an asbestos and
environmental reserve increase, the restructuring of the domestic property and
casualty business and cost reductions, are expected to contribute to future
earnings growth," 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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CIGNA also reported that CIGNA P&C has received the necessary authorizations
from its eight domiciliary states and has implemented its plan of restructure
and recapitalization, effective December 31, 1995. The restructuring creates
two separate operations, one to manage ongoing business and the other to manage
runoff policies and related claims, including those for A&E exposures.
THE FOLLOWING IS A DISCUSSION OF THE SIGNIFICANT ADJUSTMENTS FOR FULL YEAR 1995
AND 1994.
The full year 1995 results reflect a $774 million charge for strengthening net
reserves for A&E claims and unrecoverable reinsurance. The Property and
Casualty and Employee Life & Health Benefits segments recorded cost reduction
charges of $55 million and $20 million, respectively, in full year 1995,
primarily for severance and other related expenses. Results for full year 1994
included a $26 million charge for property and casualty reinsurance reserve
strengthening and a $9 million charge for CIGNA's withdrawal from the property
and casualty reinsurance business.
Further information on full year results for 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 THE SIGNIFICANT
ADJUSTMENTS NOTED ABOVE.
SEGMENT RESULTS:
EMPLOYEE LIFE AND HEALTH BENEFITS
This segment, which includes CIGNA's HMO and indemnity operations, had
operating income of $144 million in the fourth quarter of 1995. This compares
with operating income of $150 million in the fourth quarter of 1994. For full
year 1995, operating income was $513 million, compared with $531 million in
1994.
HMO medical membership grew by approximately 380,000 covered lives or 11% since
year end 1994.
EMPLOYEE RETIREMENT AND SAVINGS BENEFITS
This segment, which operates in the defined contribution and defined benefit
pension markets, had operating income of $49 million in the fourth quarter of
1995. This compares with operating income of $48 million in the fourth quarter
of 1994. For full year 1995, operating income was $192 million, compared with
$186 million in 1994.
Assets under management at December 31, 1995 were $38.2 billion, an increase of
13% from $33.9 billion as of December 31, 1994.
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 $38 million in the fourth quarter of 1995. This compares with
operating income of $35 million for the fourth quarter of 1994. For full year
1995, operating income was $150 million, compared with $131 million in 1994.
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PROPERTY AND CASUALTY
The property and casualty (P&C) segment had operating income of $67 million for
the fourth quarter of 1995. This compares with an operating loss of $6 million
for the fourth quarter of 1994. Fourth quarter 1995 results include no charges
for A&E, while the fourth quarter of 1994 includes A&E charges of $61 million.
For full year 1995, operating income was $102 million, compared with a loss of
$212 million in 1994. Full year 1995 results include $101 million for A&E
charges (excluding the third quarter adjustment discussed above), while full
year 1994 includes A&E charges of $179 million.
The International division had operating income for the fourth quarter of 1995
of $39 million, compared with $23 million in 1994. The Domestic division had
operating income of $28 million for the fourth quarter of 1995 and a loss of
$33 million in the fourth quarter of 1994, including the $61 million of A&E
charges noted above.
The consolidated GAAP combined ratio after policyholders' dividends was 106.2
and 112.5 for the fourth quarter and full year 1995, compared with 117.4 and
123.0 for the comparable periods of 1994. The GAAP combined ratio after
policyholders' dividends for the International and Domestic divisions in the
fourth quarter of 1995 was 91.9 and 118.8, respectively. Fourth quarter 1994
combined ratio after policyholders' dividends for International and Domestic
was 95.7 and 134.3, respectively.
The fourth quarter and full year of 1995 included pre-tax catastrophe losses of
$12 million and $71 million, respectively. This compares with catastrophe
losses of $5 million and $151 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 $21
million in the fourth quarter of 1995. This compares with an
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operating loss of $43 million in the fourth quarter of 1994. 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 full year 1995, the operating
loss was $75 million, compared with $83 million in 1994. Full year 1994
included a $20 million after-tax gain from the sale of a business.
NET INCOME
Consolidated net income for the quarter was $282 million ($3.69 per share),
compared with $182 million ($2.52 per share) a year ago. For full year 1995,
consolidated net income, before significant adjustments was $1.1 billion
($14.37 per share), compared with $582 million ($8.04 per share) a year ago.
For full year 1995, the consolidated net income, including the adjustments, was
$211 million ($2.86 per share), compared with income of $554 million ($7.66 per
share) a year ago.
The 1995 fourth quarter consolidated results included after-tax realized
investment gains of $5 million ($0.07 per share), compared with losses of $2
million ($0.02 per share) for the same period of 1994. The full year 1995
consolidated net income included after-tax realized investment gains of $178
million ($2.41 per share), compared with gains of $28 million ($0.39 per share)
for the same period of 1994. The significant investment gains for full year
1995 reflect the effects of restructuring several portfolios.
REVENUES
Consolidated revenues for the fourth quarter of 1995 were $4.8 billion compared
with $4.7 billion in 1994. For full year 1995, consolidated revenues were
$19.0 billion versus $18.4 billion in 1994.
ASSETS / SHAREHOLDERS' EQUITY
Assets at December 31, 1995 were $95.9 billion, compared with $86.1 billion at
year-end 1994. Shareholders' equity was $7.2 billion ($93.76 per share) at
December 31, 1995, compared with
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$5.8 billion ($80.46 per share) at December 31, 1994. This change primarily
reflects increases of approximately $1.1 billion in the unrealized appreciation
of fixed maturities carried at fair value and approximately $250 million from
conversions of CIGNA's 8.2% convertible subordinated debentures into 3.6
million shares of common stock.
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CIGNA CORPORATION
COMPARATIVE SUMMARY OF FINANCIAL RESULTS
(Dollars in millions, except per share amounts) [CIGNA LOGO]
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<TABLE>
<CAPTION>
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THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1995 1994 1995 1994
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<S> <C> <C> <C> <C>
REVENUES
Premiums and fees $ 3,574 $ 3,605 $ 13,914 $ 13,912
Net investment income 1,104 1,006 4,296 3,946
Other revenues 121 120 512 492
Realized investment gains (losses) 7 (8) 233 42
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Total $ 4,806 $ 4,723 $ 18,955 $ 18,392
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OPERATING INCOME (LOSS) BY SEGMENT*
Employee Life and Health Benefits:
Indemnity $ 98 $ 105 $ 302 $ 327
HMOs 46 45 191 204
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144 150 493 531
Employee Retirement and Savings Benefits 49 48 192 184
Individual Financial Services 38 35 150 131
Property and Casualty:
Domestic 28 28 (12) (56)
International 39 23 115 43
Other, primarily reinsurance - 4 (43) (47)
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Operations 67 55 60 (60)
Asbestos and Environmental Losses - (61) (787) (179)
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Total Property and Casualty 67 (6) (727) (239)
Other Operations (21) (43) (75) (81)
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Total $ 277 $ 184 $ 33 $ 526
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NET INCOME (LOSS) BY SEGMENT
Employee Life and Health Benefits $ 147 $ 161 $ 597 $ 548
Employee Retirement and Savings Benefits 49 48 194 190
Individual Financial Services 39 36 151 136
Property and Casualty:
Domestic 32 19 44 (54)
International 34 21 113 49
Other, primarily reinsurance 1 2 (43) (51)
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Operations 67 42 114 (56)
Asbestos and Environmental Losses - (61) (787) (179)
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Total Property and Casualty 67 (19) (673) (235)
Other Operations (20) (44) (58) (85)
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Total $ 282 $ 182 $ 211 $ 554
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SHAREHOLDERS' EQUITY AT DECEMBER 31 $ 7,157 $ 5,811
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WEIGHTED AVERAGE SHARES
OUTSTANDING (THOUSANDS) 76,425 72,315 73,719 72,317
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EARNINGS PER SHARE:
Operating income * $ 3.62 $ 2.54 $ 0.45 $ 7.27
After-tax realized investment gains (losses) 0.07 (0.02) 2.41 0.39
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Net income $ 3.69 $ 2.52 $ 2.86 $ 7.66
- ------------------------------------------------------======================================================================
SHAREHOLDERS' EQUITY PER SHARE AT DECEMBER 31 $ 93.76 $ 80.46
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</TABLE>
* Operating income is defined as net income excluding after-tax realized
investment results.
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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
YEAR ENDED DECEMBER 31, 1995 1994 1995 1994 1995 1994
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<S> <C> <C> <C> <C> <C> <C>
Operating income (loss) before
adjustments $311 $326 $202 $205 $513 $531
Asbestos / environmental charge - - - - - -
Cost reduction charges (9) - (11) - (20) -
Reinsurance charges - - - - - -
Tax audits - 1 - (1) - -
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Operating income (loss) as published 302 327 191 204 493 531
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After-tax realized investment gains
(losses) before adjustments 104 17 - - 104 17
Tax audits - - - - - -
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After-tax realized investment gains
(losses) as published 104 17 - - 104 17
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Net income (loss) $406 $344 $191 $204 $597 $548
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<CAPTION>
EMPLOYEE INDIVIDUAL
RETIREMENT & FINANCIAL PROPERTY &
SAVINGS BENEFITS SERVICES CASUALTY
YEAR ENDED DECEMBER 31, 1995 1994 1995 1994 1995 1994
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<S> <C> <C> <C> <C> <C> <C>
Operating income (loss) before
adjustments $192 $186 $150 $131 $102 * ($212) *
Asbestos / environmental charge - - - - (686) -
Cost reduction charges - - - - (55) (9)
Reinsurance charges - - - - (88) (26)
Tax audits - (2) - - - 8
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Operating income (loss) as published 192 184 150 131 (727) (239)
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After-tax realized investment gains
(losses) before adjustments 2 7 1 5 54 4
Tax audits - (1) - - - -
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After-tax realized investment gains
(losses) as published 2 6 1 5 54 4
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Net income (loss) $194 $190 $151 $136 ($673) ($235)
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<CAPTION>
EARNINGS
OTHER CONSOLIDATED PER SHARE
YEAR ENDED DECEMBER 31, 1995 1994 1995 1994 1995 1994
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<S> <C> <C> <C> <C> <C> <C>
Operating income (loss) before
adjustments ($75) ($83) $882 $553 $11.96 $7.64
Asbestos / environmental charge - - (686) - (9.30) -
Cost reduction charges - - (75) (9) (1.02) (0.12)
Reinsurance charges - - (88) (26) (1.19) (0.36)
Tax audits - 2 - 8 - 0.11
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Operating income (loss) as published (75) (81) 33 526 0.45 7.27
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After-tax realized investment gains
(losses) before adjustments 17 (4) 178 29 2.41 0.40
Tax audits - - - (1) - (0.01)
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After-tax realized investment gains
(losses) as published 17 (4) 178 28 2.41 0.39
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Net income (loss) ($58) ($85) $211 $554 $2.86 $7.66
=================================================================================================================
</TABLE>
* Amounts include asbestos and environmental losses (other than the third
quarter 1995 asbestos/environmental charge noted in the adjustments)
of $101 million for 1995, compared with $179 million for 1994.
