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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) FEBRUARY 11, 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 February 11, 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: February 11, 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
February 11, 1997
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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 REPORTS RECORD FULL YEAR 1996 RESULTS;
FULL YEAR INCOME OVER $1 BILLION
PHILADELPHIA, FEBRUARY 11, 1997 -- CIGNA Corporation (NYSE:CI) today reported
fourth quarter 1996 operating income* of $261 million, or $3.47 per share,
versus $277 million, or $3.62 per share, reported in the fourth quarter of 1995.
Operating income for the full year 1996 was $1.0 billion, or $13.14 per share.
Full year 1995 operating income was $882 million, or $11.96 per share, excluding
third quarter adjustments for asbestos and environmental, reinsurance and cost
reduction charges. Including these adjustments, operating income for the full
year 1995 was $33 million, or $0.45 per share.
Consolidated net income for the fourth quarter of 1996 was $306 million ($4.07
per share), compared with $282 million ($3.69 per share) a year ago. For the
full year 1996, consolidated net income was $1.1 billion ($13.85 per share),
compared with $211 million ($2.86 per share) for 1995, including the
adjustments.
"We are pleased with the earnings and returns achieved in 1996. Actions taken
during the year position us well for continued improvements in 1997," 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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THE FOLLOWING SEGMENT DISCUSSIONS OF OPERATING RESULTS EXCLUDE THE THIRD QUARTER
1995 ADJUSTMENTS. SEE THE ATTACHED FINANCIAL INFORMATION PAGE FOR ADDITIONAL
INFORMATION.
SEGMENT RESULTS:
EMPLOYEE LIFE AND HEALTH BENEFITS
This segment, which includes CIGNA's HMO and indemnity operations, had operating
income of $137 million in the fourth quarter of 1996. This compares with
operating income of $144 million in the fourth quarter of 1995. For the full
year 1996, operating income was $497 million, compared with $513 million in
1995.
HMO medical membership grew by about 435,000 covered lives or 11% since December
31, 1995.
EMPLOYEE RETIREMENT AND SAVINGS BENEFITS
This segment, which operates in the defined contribution and defined benefit
markets, had operating income of $54 million in the fourth quarter of 1996. This
compares with operating income of $49 million in the fourth quarter of 1995. For
the full year 1996, operating income was $201 million, compared with $192
million in 1995.
Assets under management at December 31, 1996, were $40.6 billion, an increase of
6% from $38.2 billion as of December 31, 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 $40 million in the fourth quarter of 1996. This compares with
operating income of $38 million in the fourth quarter of 1995. Full year 1996
operating income was $161 million, compared with $150 million in 1995.
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 $57 million for the fourth quarter
of 1996. This compares with operating income of $49 million for the fourth
quarter of 1995. The combined ratio in the fourth quarter of 1996 was 100%.
For the full year 1996, operating income was $211 million, compared with $128
million in 1995.
The Ongoing operations had $10 million and $8 million of after-tax catastrophe
losses for the fourth quarter of 1996 and 1995, respectively. For the full year
1996, the Ongoing operations had $48 million of after-tax catastrophe losses,
compared with $37 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 and International amounts for 1995
were not affected by the restructuring.
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International had operating income for the fourth quarter of 1996 of $33
million, compared with income of $44 million in 1995. The combined ratio was 93%
for the fourth quarter of 1996, compared with 92% for the same period last year.
For the full year 1996, International had operating income of $135 million,
compared with $128 million in 1995.
Domestic had operating income of $24 million for the fourth quarter of 1996,
compared with $5 million in 1995. The combined ratio for the fourth quarter of
1996 was 109%, compared with 112% for the comparable period of 1995. For the
full year 1996, Domestic had operating income of $76 million, compared with
break-even results in 1995.
Run-off had an operating loss of $3 million in the fourth quarter of 1996,
compared with income of $18 million for the same period in 1995. Full year 1996
operating income was $2 million, compared with a loss of $26 million in 1995.
OTHER
Other Operations, which includes unallocated investment income, expenses
(principally debt service) and taxes, as well as the results of CIGNA's
settlement annuity business and investment and real estate subsidiaries, had an
operating loss of $24 million in the fourth quarter of 1996. This compares with
an operating loss of $21 million in the fourth quarter of 1995. For the full
year 1996, the operating loss was $70 million, compared with a loss of $75
million in 1995.
REVENUES
Consolidated revenues for the fourth quarter of 1996 were $4.9 billion, compared
with $4.8 billion for the same period in 1995. For both the full year 1996 and
1995, consolidated revenues were $19.0 billion.
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ASSETS/SHAREHOLDERS' EQUITY
Assets at December 31, 1996, were $98.9 billion, compared with $95.9 billion at
year-end 1995. Shareholders' equity was $7.2 billion ($97.15 per share) at
December 31, 1996, compared with $7.2 billion ($93.76 per share) at December 31,
1995.
SHARE REPURCHASE PROGRAM
In April, 1996, the CIGNA Board of Directors authorized a $500 million share
repurchase program. As of December 31, 1996, CIGNA's cumulative purchases were
2.4 million shares at a cost of about $300 million. As of February 11, 1997,
cumulative purchases were 2.8 million shares at a cost of about $350 million.
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 in CIGNA's businesses;
and 5) significant changes in interest rates. Other important factors may be
noted from time-to-time in CIGNA's reports filed with the SEC.
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CIGNA CORPORATION
COMPARATIVE SUMMARY OF FINANCIAL RESULTS
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
================================================================================================================
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
- ----------------------------------------------------------------------------------------------------------------
REVENUES
<S> <C> <C> <C> <C>
Premiums and fees $ 3,583 $ 3,574 $ 13,916 $ 13,914
Net investment income 1,070 1,104 4,333 4,296
Other revenues 162 121 610 512
Realized investment gains 74 7 91 233
- ----------------------------------------------------------------------------------------------------------------
Total $ 4,889 $ 4,806 $ 18,950 $ 18,955
================================================================================================================
OPERATING INCOME (LOSS) BY SEGMENT (1)
Employee Life and Health Benefits:
Indemnity operations $ 88 $ 98 $ 286 $ 302
HMO operations 49 46 211 191
-------- -------- -------- --------
Total Employee Life and Health Benefits 137 144 497 493
Employee Retirement and Savings Benefits 54 49 201 192
Individual Financial Services 40 38 161 150
Property and Casualty (2):
Domestic 24 5 76 (60)
International 33 44 135 128
-------- -------- -------- --------
Ongoing operations 57 49 211 68
Run-off operations (3) 18 2 (795)
-------- -------- -------- --------
Total Property and Casualty 54 67 213 (727)
Other Operations (24) (21) (70) (75)
- ----------------------------------------------------------------------------------------------------------------
Total $ 261 $ 277 $ 1,002 $ 33
================================================================================================================
NET INCOME (LOSS) BY SEGMENT
Employee Life and Health Benefits:
Indemnity operations $ 94 $ 101 $ 289 $ 406
HMO operations 49 46 211 191
-------- -------- -------- --------
Total Employee Life and Health Benefits 143 147 500 597
Employee Retirement and Savings Benefits 64 49 222 194
Individual Financial Services 47 39 168 151
Property and Casualty (2):
Domestic 31 7 84 (2)
International 42 39 156 126
-------- -------- -------- --------
Ongoing operations 73 46 240 124
Run-off operations 7 21 -- (797)
-------- -------- -------- --------
Total Property and Casualty 80 67 240 (673)
Other Operations (28) (20) (74) (58)
- ----------------------------------------------------------------------------------------------------------------
Total $ 306 $ 282 $ 1,056 $ 211
================================================================================================================
WEIGHTED AVERAGE SHARES
OUTSTANDING (THOUSANDS) 75,255 76,425 76,248 73,719
================================================================================================================
EARNINGS PER SHARE:
Operating income (1) $ 3.47 $ 3.62 $ 13.14 $ 0.45
After-tax realized investment gains 0.60 0.07 0.71 2.41
- ----------------------------------------------------------------------------------------------------------------
Net income $ 4.07 $ 3.69 $ 13.85 $ 2.86
================================================================================================================
SHAREHOLDERS' EQUITY AT DECEMBER 31 $ 7,208 $ 7,157
================================================================================================================
SHAREHOLDERS' EQUITY PER SHARE AT DECEMBER 31 $ 97.15 $ 93.76
================================================================================================================
</TABLE>
(1) Operating income (loss) is defined as net income (loss) 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. Amounts for the International operations and for the consolidated
Property and Casualty segment for 1995 were not affected by the
restructuring.
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CIGNA CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
FINANCIAL DATA EXCLUDING THIRD QUARTER 1995 ADJUSTMENTS - RESULTS OF OPERATIONS
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
EMPLOYEE LIFE & HEALTH BENEFITS
INDEMNITY HMOS TOTAL
YEAR ENDED DECEMBER 31, 1996 1995 1996 1995 1996 1995
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating income (loss) before adjustments $ 286 $ 311 $ 211 $ 202 $ 497 $ 513
Asbestos / environmental charge -- -- -- -- -- --
Cost reduction charges -- (9) -- (11) -- (20)
Reinsurance charge -- -- -- -- -- --
- -------------------------------------------------------------------------------------------------------
Operating income (loss) as published 286 302 211 191 497 493
- -------------------------------------------------------------------------------------------------------
After-tax realized investment gains (losses) 3 104 -- -- 3 104
- -------------------------------------------------------------------------------------------------------
Net income (loss) $ 289 $ 406 $ 211 $ 191 $ 500 $ 597
=======================================================================================================
</TABLE>
<TABLE>
<CAPTION>
EMPLOYEE INDIVIDUAL INDIVIDUAL
RETIREMENT & FINANCIAL FINANCIAL PROPERTY &
SAVINGS BENEFITS SERVICES SERVICES CASUALTY
YEAR ENDED DECEMBER 31, 1996 1995 1996 1995 1996 1995
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating income (loss) before adjustments $ 201 $ 192 $ 161 $ 150 $ 213 $ 102
Asbestos / environmental charge -- -- -- -- -- (686)
Cost reduction charges -- -- -- -- -- (55)
Reinsurance charge -- -- -- -- -- (88)
- ---------------------------------------------------------------------------------------------------------
Operating income (loss) as published 201 192 161 150 213 (727)
- ---------------------------------------------------------------------------------------------------------
After-tax realized investment gains (losses) 21 2 7 1 27 54
- ---------------------------------------------------------------------------------------------------------
Net income (loss) $ 222 $ 194 $ 168 $ 151 $ 240 $ (673)
=========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
EARNINGS
OTHER CONSOLIDATED PER SHARE
YEAR ENDED DECEMBER 31, 1996 1995 1996 1995 1996 1995
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating income (loss) before
adjustments $ (70) $ (75) $ 1,002 $ 882 $ 13.14 $11.96
Asbestos / environmental charge -- -- -- (686) -- (9.30)
Cost reduction charges -- -- -- (75) -- (1.02)
Reinsurance charge -- -- -- (88) -- (1.19)
- ----------------------------------------------------------------------------------------------------
Operating income (loss) as published (70) (75) 1,002 33 13.14 0.45
- ----------------------------------------------------------------------------------------------------
After-tax realized investment gains
(losses) (4) 17 54 178 0.71 2.41
- ----------------------------------------------------------------------------------------------------
Net income (loss) $ (74) $ (58) $ 1,056 $ 211 $ 13.85 $ 2.86
====================================================================================================
</TABLE>
