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CONFORMED COPY
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 30, 1996
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
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(215) 761-1000
NOT APPLICABLE
(Former name or former address, if changed since last report)
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Item 5. Other Events.
On October 30, 1996, 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 30, 1996 By: /s/ Gary A. Swords
-------------------------------
Gary A. Swords
Vice President and
Chief Accounting Officer
Index to Exhibits
<TABLE>
<CAPTION>
Number Description Method of Filing
- ------ ----------- ----------------
<S> <C> <C>
20 CIGNA Corporation Filed herewith.
news release dated
October 30, 1996
</TABLE>
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NEWS RELEASE [CIGNA Logo]
EXHIBIT 20
IMMEDIATE
ROBERT W. SULLIVAN, FINANCIAL RELATIONS - (215) 761-6130
MICHAEL J. MONROE, MEDIA RELATIONS - (215) 761-6133
CIGNA'S THIRD QUARTER 1996 RESULTS
PHILADELPHIA, OCTOBER 30, 1996 -- CIGNA Corporation (NYSE:CI) today reported
third quarter 1996 operating income* of $270 million, or $3.55 per share,
versus a loss of $579 million, or a loss of $7.94 per share, reported in the
third quarter of 1995. The third quarter 1995 loss included $849 million of
after-tax adjustments for asbestos and environmental (A&E), cost reduction and
unrecoverable reinsurance charges. Excluding these adjustments, third quarter
1995 operating income was $270 million, or $3.70 per share ($3.57 per share
assuming full conversion of 8.2% convertible debentures, announced as of the
third quarter of 1995), and includes no A&E losses.
Third quarter 1996 results include $18 million of catastrophe losses, $13
million due to Hurricane Fran. This compares with $5 million of catastrophe
losses in the third quarter of 1995.
Operating income for the nine months of 1996 was $741 million, or $9.68 per
share, compared with a loss of $244 million, or a loss of $3.36 per share, for
the nine months of 1995. Operating income for the nine months of 1995, before
adjustments, was $605 million, or $8.33 per share.
"Our third quarter and year-to-date results continue to reflect strong
performance in our life and pension businesses. Health results are solid but
remain a focus for improvement. Property and Casualty results, excluding the
effect of Hurricane Fran, showed continued improvement," 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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FURTHER INFORMATION ON THE THIRD QUARTER AND NINE MONTHS OF 1995, BEFORE AND
AFTER ADJUSTMENTS, IS PROVIDED ON THE ATTACHED FINANCIAL INFORMATION PAGE ALONG
WITH 1996 RESULTS. THE FOLLOWING SEGMENT DISCUSSIONS OF OPERATING RESULTS
EXCLUDE THE 1995 ADJUSTMENTS.
SEGMENT RESULTS:
EMPLOYEE LIFE AND HEALTH BENEFITS
This segment, which includes CIGNA's HMO and indemnity operations, had
operating income of $127 million in the third quarter of 1996. This compares
with operating income of $136 million in the third quarter of 1995. For the
nine months of 1996, operating income was $360 million, compared with $369
million in 1995.
HMO medical membership grew by about 400,000 covered lives or 10% since
September 30, 1995.
EMPLOYEE RETIREMENT AND SAVINGS BENEFITS
This segment, which operates in the defined contribution and defined benefit
markets, had operating income of $52 million in the third quarter of 1996.
This compares with operating income of $48 million in the third quarter of
1995. For the nine months of 1996, operating income was $147 million, compared
with $143 million in 1995.
Assets under management at September 30, 1996, were $39.0 billion, an increase
of 5% from $37.2 billion as of September 30, 1995.
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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 $47 million in the third quarter of 1996. This compares with
operating income of $36 million in the third quarter of 1995. For the nine
months of 1996, operating income was $121 million, compared with $112 million
in 1995.
PROPERTY AND CASUALTY*
The property and casualty (P&C) segment, which includes the Ongoing operations
(International and Domestic) and Runoff, had operating income of $58 million
for the third quarter of 1996. This compares with operating income of $66
million for the third quarter of 1995. For the nine months of 1996, operating
income was $159 million, compared with $35 million in 1995.
Ongoing operations had operating income of $57 million for the third quarter of
1996. This compares with operating income of $47 million for the third quarter
of 1995. For the nine months of 1996, operating income was $154 million,
compared with $79 million in 1995. The combined ratio in the third quarter of
1996 was 100%.
After-tax catastrophe losses for the Ongoing operations were $18 million and $3
million for the third quarter of 1996 and 1995, respectively. The third
quarter 1996 catastrophes included $13 million of after-tax losses due to
Hurricane Fran. For the nine months of 1996, after-tax catastrophe losses for
the Ongoing operations were $38 million compared with $29 million in 1995.
* AMOUNTS FOR 1995 ARE REPORTED ON A PRO FORMA BASIS AS THOUGH THE DOMESTIC P&C
RESTRUCTURING, WHICH WAS EFFECTIVE AS OF DECEMBER 31, 1995, WAS IN PLACE AT THE
BEGINNING OF 1995. THESE PRO FORMA RESULTS ARE NOT NECESSARILY INDICATIVE OF
THE RESULTS THAT WOULD HAVE BEEN REPORTED HAD THE RESTRUCTURING ACTUALLY
OCCURRED AS OF JANUARY 1, 1995. CONSOLIDATED P&C SEGMENT AMOUNTS FOR 1995 DID
NOT CHANGE.
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International had operating income for the third quarter of 1996 of $37
million, compared with income of $36 million in 1995. The combined ratio was
92% for the third quarter of 1996 and 1995. For the nine months of 1996,
International's operating income was $102 million, compared with $84 million in
1995.
Domestic had operating income of $20 million for the third quarter of 1996,
compared with income of $11 million in 1995. The combined ratio for the third
quarter of 1996 was 108%, compared with 111% for the comparable period of 1995.
For the nine months of 1996, Domestic's operating income was $52 million,
compared with a loss of $5 million in 1995.
Run-off had operating income of $1 million in the third quarter of 1996,
compared with income of $19 million for the same period in 1995.
OTHER
Other Operations, which includes unallocated investment income, expenses
(principally debt service) and taxes, as well as the results of CIGNA's
investment and real estate subsidiaries and settlement annuity business, had an
operating loss of $14 million in the third quarter of 1996. This compares with
an operating loss of $16 million in the third quarter of 1995. For the nine
months of 1996, the operating loss was $46 million, compared with a loss of $54
million in 1995.
NET INCOME
Consolidated net income for the quarter was $281 million ($3.69 per share),
compared with $283 million ($3.88 per share), before the noted adjustments, a
year ago. For the nine months of 1996, consolidated net income was $750
million ($9.80 per share), compared with $778 million ($10.71 per share),
before the noted adjustments, a year ago. Including the adjustments, the
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consolidated net loss for the third quarter and nine months of 1995 was $566
million ($7.76 per share) and $71 million ($0.98 per share), respectively.
The 1996 third quarter consolidated net income included after-tax realized
investment gains of $11 million ($0.14 per share), compared with gains of $13
million ($0.18 per share) for the same period of 1995. The nine months of 1996
consolidated net income included after-tax realized investment gains of $9
million ($0.12 per share), compared with gains of $173 million ($2.38 per
share) for the same period of 1995. The significant investment gains in the
nine months of 1995 reflect the effects of restructuring the equity portfolio.
REVENUES
Consolidated revenues for the third quarter of 1996 were $4.7 billion, compared
with $4.6 billion for the same period in 1995. For both the nine months of
1996 and 1995, consolidated revenues were $14.1 billion.
ASSETS/SHAREHOLDERS' EQUITY
Assets at September 30, 1996, were $97.3 billion, compared with $95.9 billion
at year-end 1995. Shareholders' equity was $7.0 billion ($93.22 per share) at
September 30, 1996, compared with $7.2 billion ($93.76 per share) at December
31, 1995.
###
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CIGNA CORPORATION
COMPARATIVE SUMMARY OF FINANCIAL RESULTS
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
==================================================================================================================
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
Premiums and fees $ 3,444 $ 3,408 $ 10,333 $ 10,340
Net investment income 1,069 1,080 3,263 3,192
Other revenues 154 134 448 391
Realized investment gains 18 20 17 226
- ------------------------------------------------------------------------------------------------------------------
Total $ 4,685 $ 4,642 $ 14,061 $ 14,149
==================================================================================================================
OPERATING INCOME (LOSS) BY SEGMENT (1)
Employee Life and Health Benefits:
Indemnity operations $ 73 $ 78 $ 198 $ 204
HMO operations 54 38 162 145
--------- ---------- -------- ---------
Total Employee Life and Health Benefits 127 116 360 349
Employee Retirement and Savings Benefits 52 48 147 143
Individual Financial Services 47 36 121 112
Property and Casualty (2):
Domestic 20 (49) 52 (65)
International 37 36 102 84
--------- ---------- -------- ---------
Ongoing operations 57 (13) 154 19
Run-off operations 1 (750) 5 (813)
--------- ---------- -------- ---------
Total Property and Casualty 58 (763) 159 (794)
Other Operations (14) (16) (46) (54)
- ------------------------------------------------------------------------------------------------------------------
Total $ 270 $ (579) $ 741 $ (244)
==================================================================================================================
NET INCOME (LOSS) BY SEGMENT
Employee Life and Health Benefits:
Indemnity operations $ 76 $ 79 $ 195 $ 305
HMO operations 54 38 162 145
--------- ---------- -------- ---------
Total Employee Life and Health Benefits 130 117 357 450
Employee Retirement and Savings Benefits 57 48 158 145
Individual Financial Services 47 37 121 112
Property and Casualty (2):
Domestic 20 (43) 53 (9)
International 39 40 114 87
--------- ---------- -------- ---------
Ongoing operations 59 (3) 167 78
Run-off operations - (753) (7) (818)
--------- ---------- -------- ---------
Total Property and Casualty 59 (756) 160 (740)
Other Operations (12) (12) (46) (38)
- ------------------------------------------------------------------------------------------------------------------
Total $ 281 $ (566) $ 750 $ (71)
==================================================================================================================
WEIGHTED AVERAGE SHARES
OUTSTANDING (thousands) 76,055 72,908 76,585 72,561
==================================================================================================================
EARNINGS PER SHARE:
Operating income (loss) (1) $ 3.55 $ (7.94) $ 9.68 $ (3.36)
After-tax realized investment gains 0.14 0.18 0.12 2.38
- ------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 3.69 $ (7.76) $ 9.80 $ (0.98)
==================================================================================================================
SHAREHOLDERS' EQUITY at September 30 $ 7,008 $ 6,394
==================================================================================================================
SHAREHOLDERS' EQUITY PER SHARE at September 30 $ 93.22 $ 86.38
==================================================================================================================
</TABLE>
(1) Operating income is defined as net income excluding after-tax realized
investment results.
(2) Amounts for the Property and Casualty segment's Domestic and Run-off
operations for 1995 are reported on a pro forma basis as though the
Property and Casualty restructuring, which was effective as of
December 31, 1995, was in place at the beginning of 1995. These pro
forma results are not necessarily indicative of the results that would
have been reported had the restructuring actually occurred as of
January 1, 1995. Consolidated Property and Casualty segment amounts
for 1995 did not change.
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CIGNA CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
FINANCIAL DATA EXCLUDING SPECIFIC ADJUSTMENTS - RESULTS OF OPERATIONS
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Employee Life & Health Benefits Employee
Retirement &
Indemnity HMOs Total Savings Benefits
Three months ended September 30, 1996 1995 1996 1995 1996 1995 1996 1995
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating income (loss) before adjustments $73 $87 $54 $49 $127 $136 $52 $48
Asbestos / environmental charge - - - - - - - -
Cost reduction charges - (9) - (11) - (20) - -
Reinsurance charge - - - - - - - -
------------------------------------------------------------------
Operating income (loss) as published 73 78 54 38 127 116 52 48
------------------------------------------------------------------
After-tax realized investment gains 3 1 - - 3 1 5 -
------------------------------------------------------------------
Net income (loss) $76 $79 $54 $38 $130 $117 $57 $48
=================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Individual
Financial Property & Earnings
Services Casualty Other Consolidated Per Share
Three months ended September 30, 1996 1995 1996 1995 1996 1995 1996 1995 1996 1995
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating income (loss) before adjustments $47 $36 $58 $66 ($14) ($16) $270 $270 $3.55 $3.70
Asbestos / environmental charge - - - (686) - - - (686) - (9.41)
Cost reduction charges - - - (55) - - - (75) - (1.03)
Reinsurance charge - - - (88) - - - (88) - (1.20)
-----------------------------------------------------------------------------
Operating income (loss) as published 47 36 58 (763) (14) (16) 270 (579) 3.55 (7.94)
-----------------------------------------------------------------------------
After-tax realized investment gains - 1 1 7 2 4 11 13 0.14 0.18
-----------------------------------------------------------------------------
Net income (loss) $47 $37 $59 ($756) ($12) ($12) $281 ($566) $3.69 ($7.76)
============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Employee Life & Health Benefits Employee
Retirement &
Indemnity HMOs Total Savings Benefits
Nine months ended September 30, 1996 1995 1996 1995 1996 1995 1996 1995
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating income (loss) before adjustments $198 $213 $162 $156 $360 $369 $147 $143
Asbestos / environmental charge - - - - - - - -
Cost reduction charges - (9) - (11) - (20) - -
Reinsurance charge - - - - - - - -
------------------------------------------------------------------
Operating income (loss) as published 198 204 162 145 360 349 147 143
------------------------------------------------------------------
After-tax realized investment gains (losses) (3) 101 - - (3) 101 11 2
- -----------------------------------------------------------------------------------------------------------------
Net income (loss) $195 $305 $162 $145 $357 $450 $158 $145
=================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Individual
Financial Property & Earnings
Services Casualty Other Consolidated Per Share
Nine months ended September 30, 1996 1995 1996 1995 1996 1995 1996 1995 1996 1995
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating income (loss) before adjustments $121 $112 $159 $35 ($46) ($54) $741 $605 $9.68 $8.33
Asbestos / environmental charge - - - (686) - - - (686) - (9.45)
Cost reduction charges - - - (55) - - - (75) - (1.03)
Reinsurance charge - - - (88) - - - (88) - (1.21)
----------------------------------------------------------------------------
Operating income (loss) as published 121 112 159 (794) (46) (54) 741 (244) 9.68 (3.36)
----------------------------------------------------------------------------
After-tax realized investment gains (losses) - - 1 54 - 16 9 173 0.12 2.38
- ---------------------------------------------------------------------------------------------------------------------------
Net income (loss) $121 $112 $160 ($740) ($46) ($38) $750 ($71) $9.80 ($0.98)
===========================================================================================================================
</TABLE>
