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) July 30, 1997
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 July 30, 1997, 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: July 30, 1997 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
July 30, 1997
NEWS RELEASE [CIGNA LOGO]
EXHIBIT 20
Immediate
Albert D. Ciavardelli, Financial Relations - (215) 761-6128
Michael J. Monroe, Media Relations - (215) 761-6133
CIGNA'S SECOND QUARTER 1997 RESULTS
OPERATING INCOME SHOWS STEADY GROWTH;
OPERATING EPS UP 10%
PHILADELPHIA, JULY 30, 1997 -- CIGNA Corporation (NYSE:CI) today reported second
quarter 1997 operating income* of $270 million, or $3.61 per share, versus $252
million, or $3.28 per share, reported in the second quarter of 1996. For the
first half of 1997, operating income was $530 million or $7.10 per share, versus
$471 million, or $6.13 per share, for 1996.
"We are pleased with the continued earnings growth which reflects strength in
all of our major business segments. I remain confident that in spite of strong
competition throughout the insurance industry we will see continued improvement.
We also believe that the recent Healthsource acquisition and the sale of the
individual life and annuity businesses will further strengthen our operations,"
said Wilson H. Taylor, CIGNA's Chief Executive Officer.
* Operating income (loss) is defined as net income (loss) excluding after-tax
realized investment results.
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SEGMENT RESULTS:
EMPLOYEE LIFE AND HEALTH BENEFITS
This segment, which includes CIGNA's HMO and indemnity operations, had operating
income of $126 million in the second quarter of 1997. This compares with
operating income of $121 million in the second quarter of 1996. For the first
six months of 1997, operating income was $243 million, compared with $233
million for the same period last year.
HMO medical membership grew by approximately 280,000 covered lives, or 7%, since
June 30, 1996.
Results for the Healthsource operations, which were acquired at the end of June
1997, will be included in CIGNA's results beginning with the third quarter.
EMPLOYEE RETIREMENT AND SAVINGS BENEFITS
This segment, which operates in the defined contribution and defined benefit
markets, had operating income of $53 million in the second quarter of 1997. This
compares with operating income of $44 million in the second quarter of 1996. For
the first six months of 1997, operating income was $107 million, compared with
$95 million for the first six months of 1996.
Assets under management at June 30, 1997 were $43.8 billion, an increase of 14%
from $38.5 billion as of June 30, 1996.
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INDIVIDUAL FINANCIAL SERVICES
This segment, which currently includes individual and corporate-owned life
insurance; life, accident and health reinsurance; and annuity businesses, had
operating income of $48 million in the second quarter of 1997. This compares
with operating income of $42 million in the second quarter of 1996. For the
first six months of 1997, operating income was $95 million, compared with $74
million in 1996.
The individual life insurance and annuity businesses, which (subject to
regulatory approval) will be sold to Lincoln National Corporation, represent
approximately $44 million or 46 percent of this segment's earnings in the first
six months of 1997. The corporate-owned life insurance and reinsurance
businesses, with earnings of $51 million in the first six months of 1997, will
be retained by CIGNA.
PROPERTY AND CASUALTY
The property and casualty (P&C) segment includes the Ongoing operations
(International and Domestic) and Run-off.
Ongoing operations had operating income of $59 million for the second quarter of
1997. This compares with operating income of $56 million for the same period
last year. The GAAP combined ratio after policyholders' dividends was 100 for
the second quarter of 1997, compared with 101 for the second quarter of 1996.
For the first six months of 1997, operating income was $115 million, compared
with $97 million for 1996.
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The Ongoing operations had $1 million of after-tax catastrophe losses for the
second quarter of 1997, compared with $5 million for the same period last year.
After-tax catastrophe losses for the first six months of 1997 were $9 million,
compared with $20 million for 1996.
Within the Ongoing operations, International had operating income of $36 million
for the second quarter of 1997, which was equal to the second quarter 1996
results. The GAAP combined ratio after policyholders' dividends was 94 for the
second quarter of 1997, compared with 93 for the same period of 1996. Domestic
had operating income of $23 million for the second quarter of 1997, compared
with $20 million in 1996. The GAAP combined ratio after policyholders' dividends
for the second quarter of 1997 was 106, compared with 109 for the second quarter
of 1996.
Run-off operations were breakeven in the second quarter of 1997, compared with
operating income of $3 million for the same period in 1996.
OTHER
Other Operations includes unallocated investment income, expenses (including
debt service) and taxes, and the results of CIGNA's settlement annuity business,
investment and real estate subsidiaries and certain new business initiatives.
Other Operations had an operating loss of $16 million in the second quarter of
1997, compared with an operating loss of $14 million in the second quarter of
1996. For the first six months of 1997, the operating loss was $31 million,
compared with a loss of $32 million in 1996.
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NET INCOME
Consolidated net income for the quarter was $279 million, or $3.73 per share,
compared with $231 million, or $3.00 per share, a year ago. For the first half
of 1997, consolidated net income was $567 million, or $7.59 per share, compared
with $469 million, or $6.10 per share a year ago.
The 1997 second quarter consolidated net income included after-tax realized
investment gains of $9 million, or $0.12 per share, compared with losses of $21
million, or $0.28 per share, for the same period of 1996. Consolidated net
income for the first half of 1997 included after-tax realized investment gains
of $37 million, or $0.49 per share, compared with losses of $2 million, or $0.03
per share, for the same period of 1996.
REVENUES
Consolidated revenues for the second quarter and first six months of 1997 were
$4.7 billion and $9.4 billion, respectively, level with the same periods last
year.
ASSETS/SHAREHOLDERS' EQUITY
Assets at June 30, 1997 were $103.7 billion, compared with $98.9 billion at
year-end 1996. Shareholders' equity was $7.5 billion ($101.98 per share) at June
30, 1997, compared with $7.2 billion ($97.15 per share) at December 31, 1996.
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Quarterly earnings are available on CIGNA's home page on the Internet
(http://www.cigna.com).
Statements not dealing with historical results are forward-looking and are based
on estimates, assumptions and projections. CIGNA cautions the reader that actual
results could differ materially from those expected by CIGNA, depending on the
outcome of certain factors including: 1) adverse catastrophe experience in
CIGNA's property and casualty businesses; 2) adverse property and casualty loss
development for events that CIGNA insured in prior years; 3) an increase in
medical costs in CIGNA's health care operations, including increases in
utilization and costs of medical services; 4) heightened competition,
particularly price competition, reducing product margins and constraining growth
in CIGNA's businesses; 5) significant changes in interest rates; and 6) charges
associated with the Healthsource acquisition.
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CIGNA CORPORATION [CIGNA LOGO]
COMPARATIVE SUMMARY OF FINANCIAL RESULTS
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
REVENUES
Premiums and fees $ 3,482 $ 3,499 $ 6,870 $ 6,889
Net investment income 1,062 1,111 2,115 2,194
Other revenues 163 152 323 294
Realized investment gains (losses) 12 (31) 56 (1)
-------- -------- -------- --------
Total $ 4,719 $ 4,731 $ 9,364 $ 9,376
======== ======== ======== ========
OPERATING INCOME (LOSS) BY SEGMENT (1)
Employee Life and Health Benefits:
Indemnity operations $ 68 $ 69 $ 126 $ 125
HMO operations 58 52 117 108
-------- -------- -------- --------
Total Employee Life and Health Benefits 126 121 243 233
Employee Retirement and Savings Benefits 53 44 107 95
Individual Financial Services 48 42 95 74
Property and Casualty:
International 36 36 69 65
Domestic 23 20 46 32
-------- -------- -------- --------
Ongoing operations 59 56 115 97
Run-off operations -- 3 1 4
-------- -------- -------- --------
Total Property and Casualty 59 59 116 101
Other Operations (16) (14) (31) (32)
-------- -------- -------- --------
Total $ 270 $ 252 $ 530 $ 471
======== ======== ======== ========
NET INCOME (LOSS) BY SEGMENT
Employee Life and Health Benefits:
Indemnity operations $ 70 $ 65 $ 132 $ 119
HMO operations 58 52 117 108
-------- -------- -------- --------
Total Employee Life and Health Benefits 128 117 249 227
Employee Retirement and Savings Benefits 54 40 116 101
Individual Financial Services 47 40 102 74
Property and Casualty:
International 42 39 83 75
Domestic 25 16 47 33
-------- -------- -------- --------
Ongoing operations 67 55 130 108
Run-off operations (1) (4) 1 (7)
-------- -------- -------- --------
Total Property and Casualty 66 51 131 101
Other Operations (16) (17) (31) (34)
-------- -------- -------- --------
Total $ 279 $ 231 $ 567 $ 469
======== ======== ======== ========
WEIGHTED AVERAGE SHARES
OUTSTANDING (thousands) 74,740 76,821 74,664 76,854
EARNINGS PER SHARE:
Operating income (1) $ 3.61 $ 3.28 $ 7.10 $ 6.13
After-tax realized investment gains (losses) 0.12 (0.28) 0.49 (0.03)
-------- -------- -------- --------
Net income $ 3.73 $ 3.00 $ 7.59 $ 6.10
======== ======== ======== ========
SHAREHOLDERS' EQUITY at June 30 $ 7,548 $ 6,885
======== ========
SHAREHOLDERS' EQUITY PER SHARE at June 30 $ 101.98 $ 90.40
======== ========
</TABLE>
(1) Operating income (loss) is defined as net income (loss) excluding after-tax
realized investment results.
