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, 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 October 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: October 31, 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
October 30, 1997
EXHIBIT 20
[CIGNA LOGO]
Immediate
Albert D. Ciavardelli, Investor Relations - (215) 761-6128
Michael J. Monroe, Media Relations - (215) 761-6133
CIGNA REPORTS OPERATING INCOME OF $3.49 FOR THIRD QUARTER
AND ANNOUNCES ADDITIONAL $500 MILLION SHARE REPURCHASE AUTHORIZATION
PHILADELPHIA, October 30, 1997 -- CIGNA Corporation (NYSE:CI) today reported
third quarter 1997 operating income* of $262 million, or $3.49 per share, versus
$270 million, or $3.55 per share, reported in the third quarter of 1996. Results
for 1997 include approximately $17 million after-tax associated with costs to
finance the recent acquisition of Healthsource. For the nine months of 1997,
operating income was $792 million, or $10.59 per share, versus $741 million, or
$9.68 per share, for 1996.
"We continue to be pleased with the solid contributions of each of our operating
divisions and anticipate full year results will be ahead of last year," said
Wilson H. Taylor, CIGNA's Chief Executive Officer. "The integration of
Healthsource is proceeding according to our expectations," Taylor added.
* 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 includes CIGNA's HMO and indemnity operations as well as
Healthsource results subsequent to the acquisition date of June 25, 1997. The
segment had operating income of $128 million in the third quarter of 1997,
compared with $127 million for the third quarter of 1996. For the nine months of
1997, operating income was $371 million, compared with $360 million for the same
period last year.
HMO membership, including the addition of 1.2 million Healthsource members, is
now at 5.8 million members, up 9 percent over third quarter 1996, on a
comparable basis.
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 third quarter of 1997. This
compares with operating income of $52 million for the same period last year. For
the nine months of 1997, operating income was $160 million, compared with $147
million for the nine months of 1996.
Assets under management at September 30, 1997 were $45.4 billion, an increase of
16 percent from $39.1 billion as of September 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 $51 million in the third quarter of 1997. This compares with
operating income of $47 million in the third quarter of 1996. For the nine
months of 1997, operating income was $146 million, compared with $121 million in
1996.
The individual life insurance and annuity businesses, which -- subject to
regulatory approval -- will be sold to Lincoln National Corporation, represent
$70 million, or 48 percent, of this segment's operating income in the nine
months of 1997. The corporate-owned life insurance and reinsurance businesses,
with operating income of $76 million in the nine 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 third quarter of
1997. This compares with operating income of $57 million for the same period
last year. The GAAP combined ratio after policyholders' dividends was 100 for
the third quarters of 1997 and 1996. For the nine months of 1997, operating
income was $174 million, compared with $154 million for 1996.
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The Ongoing operations had $1 million of after-tax catastrophe losses for the
third quarter of 1997, compared with $18 million for the same period last year,
which included $13 million for Hurricane Fran. After-tax catastrophe losses for
the nine months of 1997 were $10 million, compared with $38 million for 1996.
Within the Ongoing operations, International had operating income of $33 million
for the third quarter of 1997, compared with $37 million in 1996. The GAAP
combined ratio after policyholders' dividends was 95 for the third quarter of
1997, compared with 92 for the same period of 1996. Domestic had operating
income of $26 million for the third quarter of 1997, compared with $20 million
in 1996. Its GAAP combined ratio after policyholders' dividends for the third
quarter of 1997 was 105, compared with 108 for the third quarter of 1996.
Run-off operations were breakeven in the third quarter of 1997, compared with
operating income of $1 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 $29 million in the third quarter of
1997, compared with an operating loss of $14 million in the third quarter of
1996.
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For the nine months of 1997, the operating loss was $60 million, compared with a
loss of $46 million in 1996.
NET INCOME
Consolidated net income for the quarter was $279 million, or $3.72 per share,
compared with $281 million, or $3.69 per share, a year ago (total weighted
average shares were 75.0 million in 1997 and 76.1 million in 1996). For the nine
months of 1997, consolidated net income was $846 million, or $11.31 per share,
compared with $750 million, or $9.80 per share a year ago.
The 1997 third quarter consolidated net income included after-tax realized
investment gains of $17 million, or $0.23 per share, compared with gains of $11
million, or $0.14 per share, for the same period of 1996. Consolidated net
income for the nine months of 1997 included after-tax realized investment gains
of $54 million, or $0.72 per share, compared with gains of $9 million, or $0.12
per share, for the same period of 1996.
REVENUES
Consolidated revenues for the third quarter and nine months of 1997 were $5.2
billion and $14.5 billion, respectively, compared with $4.7 billion and $14.1
billion for the same periods last year.
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ASSETS/SHAREHOLDERS' EQUITY
Assets at September 30, 1997 were $106.4 billion, compared with $98.9 billion at
year-end 1996. Shareholders' equity was $8.0 billion ($107.90 per share) at
September 30, 1997, compared with $7.2 billion ($97.15 per share) at December
31, 1996.
SHARE REPURCHASE
CIGNA's Board of Directors today authorized the purchase of up to an additional
$500 million of its common stock, depending on prevailing market conditions and
alternative uses of capital. This brings total available share repurchase
authority to approximately $565 million. Earlier this month, CIGNA resumed
repurchase activity and bought 517,000 shares for $89 million, bringing the
total shares repurchased in 1997 to 857,000.
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 LOGO]
CIGNA CORPORATION
COMPARATIVE SUMMARY OF FINANCIAL RESULTS
(Dollars in millions, except per share amounts)
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<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
- --------------------------------------------------------------------------------------------------------
REVENUES
Premiums and fees $3,925 $3,444 $10,795 $10,333
Net investment income 1,057 1,069 3,172 3,263
Other revenues 175 154 498 448
Realized investment gains 25 18 81 17
-------- -------- -------- --------
Total $5,182 $4,685 $14,546 $14,061
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OPERATING INCOME (LOSS) BY SEGMENT (1)
Employee Life and Health Benefits:
Indemnity operations $76 $73 $202 $198
HMO operations 52 54 169 162
-------- -------- -------- --------
Total Employee Life and Health Benefits 128 127 371 360
Employee Retirement and Savings Benefits 53 52 160 147
Individual Financial Services 51 47 146 121
Property and Casualty:
International 33 37 102 102
Domestic 26 20 72 52
-------- -------- -------- --------
Ongoing operations 59 57 174 154
Run-off operations -- 1 1 5
-------- -------- -------- --------
Total Property and Casualty 59 58 175 159
Other Operations (29) (14) (60) (46)
-------- -------- -------- --------
Total $262 $270 $792 $741
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NET INCOME (LOSS) BY SEGMENT
Employee Life and Health Benefits:
Indemnity operations $72 $76 $204 $195
HMO operations 52 54 169 162
-------- -------- -------- --------
Total Employee Life and Health Benefits 124 130 373 357
Employee Retirement and Savings Benefits 51 57 167 158
Individual Financial Services 49 47 151 121
Property and Casualty:
International 44 39 127 114
Domestic 39 20 86 53
-------- -------- -------- --------
Ongoing operations 83 59 213 167
Run-off operations (1) -- -- (7)
-------- -------- -------- --------
Total Property and Casualty 82 59 213 160
Other Operations (27) (12) (58) (46)
-------- -------- -------- --------
Total $279 $281 $846 $750
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WEIGHTED AVERAGE SHARES
OUTSTANDING (thousands) 75,041 76,055 74,791 76,585
======== ======== ======== ========
EARNINGS PER SHARE:
Operating income (1) $3.49 $3.55 $10.59 $9.68
After-tax realized investment gains 0.23 0.14 0.72 0.12
-------- -------- -------- --------
Net income $3.72 $3.69 $11.31 $9.80
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SHAREHOLDERS' EQUITY at September 30 $7,991 $7,008
======== ========
SHAREHOLDERS' EQUITY PER SHARE at September 30 $107.90 $93.22
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(1) Operating income (loss) is defined as net income (loss) excluding after-tax realized investment results.
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