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) April 30, 1998
--------------
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)
<PAGE>
Item 5. Other Events.
-------------
A. On April 30, 1998, the registrant issued a news release, a copy of
which is filed as Exhibit 20 hereto and is incorporated herein by reference.
CAUTIONARY STATEMENT FOR PURPOSES OF THE 'SAFE HARBOR' PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
Statements not dealing with historical results are forward-looking and
are based on estimates, assumptions and projections. CIGNA cautions 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) the
effect on CIGNA's international operations and investments from further
significant deterioration in Asian economies.
B. As a result of CIGNA's three-for-one stock split, which was approved
by shareholders at the April 22, 1998 Annual Meeting of Shareholders, and
pursuant to Rule 416(b) of the Securities Act of 1933, the 1,500,000 shares of
CIGNA Common Stock, par value $1.00 per share, registered under Registration
Statement No. 33-51791 on Form S-8, are proportionately adjusted to 4,500,000
shares of Common Stock, par value $.25 per share.
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: May 1, 1998 By:/s/ Gary A. Swords
------------------
Gary A. Swords
Vice President and
Chief Accounting Officer
<PAGE>
Index to Exhibits
-----------------
Number Description Method of Filing
- ------ ----------- ----------------
20 CIGNA Corporation Filed herewith
news release dated
April 30, 1998
NEWS RELEASE Exhibit 20 [CIGNA LOGO]
Immediate
Albert D. Ciavardelli, Investor Relations - (215) 761-6128
Michael J. Monroe, Media Relations - (215) 761-6133
CIGNA REPORTS FIRST QUARTER RESULTS
EARNINGS UP FOR EMPLOYEE HEALTH AND PENSION BENEFITS SEGMENTS
PHILADELPHIA, April 30, 1998 -- CIGNA Corporation (NYSE:CI) today reported first
quarter 1998 operating income* of $255 million, or $3.51 per share, excluding an
after-tax gain from the sale of certain businesses and before giving effect to
CIGNA's three-for-one stock split**. On a post-split basis, operating income per
share would be $1.17. This compares with operating income of $260 million, or
$3.51 per share ($1.17 per share post-split) for the first quarter of 1997.
Operating income for the first quarter of 1998, including an after-tax gain of
$202 million associated with the sale of CIGNA's individual life insurance and
annuity businesses, was $457 million, or $6.30 per share ($2.10 per share
post-split).
SEGMENT RESULTS:
Employee Life and Health Benefits
- ---------------------------------
This segment includes CIGNA's HMO and indemnity operations as well as
Healthsource results since the acquisition date of June 25, 1997. The segment
had operating income of $131 million in the first quarter of 1998, compared with
$117 million for the same period last year.
______________________
* Operating income (loss) is defined as net income (loss) excluding after-tax
realized investment results. All earnings per share amounts are on a diluted
basis.
** On April 22, 1998 CIGNA's shareholders approved a three-for-one stock split.
The record date for the stock split is May 4, the distribution date for the
split shares is May 15 and CIGNA expects its shares to begin trading on a
split-adjusted basis on May 18.
<PAGE>
- 2 -
HMO medical membership at March 31, 1998 was 6.3 million members, an increase of
400,000 members, or 7 percent, from December 31, 1997, and up 11 percent over
first quarter 1997 on a pro forma basis.
Employee Retirement and Savings Benefits
- ----------------------------------------
This segment, which operates in the defined contribution and defined benefit
markets, had operating income of $56 million in the first quarter of 1998. This
compares with operating income of $54 million for the same period last year.
Assets under management at March 31, 1998 were $48.4 billion, an increase of 18
percent from $41.1 billion as of March 31, 1997.
Individual Financial Services
- -----------------------------
CIGNA sold its individual life insurance and annuity businesses effective
January 1, 1998 to Lincoln National Corporation and received $1.4 billion in
cash and retained approximately $225 million of capital previously committed to
the businesses that were sold. The sale resulted in an after-tax gain of $773
million. Because the sale was principally in the form of an indemnity
reinsurance arrangement, $202 million was recognized at closing and $571 million
was deferred and will be recognized in future periods, beginning with $17
million after-tax in the first quarter of 1998.
<PAGE>
- 3 -
Following the sale, the segment includes the results of CIGNA's corporate-owned
life insurance, and life, accident and health reinsurance businesses, as well as
the recognition of the deferred gain from the sale of the individual life
insurance and annuity businesses.
The segment's operating income, excluding the $202 million gain on the sale, was
$41 million in the first quarter of 1998, compared with $47 million for the same
period last year.
Property and Casualty
- ---------------------
Ongoing operations had operating income of $50 million and a GAAP combined ratio
after policyholders' dividends ("combined ratio") of 101 for the first quarter
of 1998. This compares with operating income of $56 million and a combined ratio
of 100 for the same period last year.
Within the Ongoing operations, International had operating income of $31 million
and a combined ratio of 95 for the first quarter of 1998. This compares with
operating income of $33 million and a combined ratio of 94 for the first quarter
of 1997. Domestic had operating income of $19 million and a combined ratio of
109 for the first quarter of 1998. This compares with operating income of $23
million and a combined ratio of 108 for the first quarter of 1997.
<PAGE>
- 4 -
Other
- -----
Other Operations includes unallocated investment income, interest expense
(including debt service associated with the Healthsource acquisition) 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 $23 million in the first quarter of 1998, compared with an
operating loss of $15 million for the same period last year.
NET INCOME
- ----------
Consolidated net income for the first quarter of 1998 was $495 million, or $6.82
per share ($2.27 per share post-split), including an after-tax gain of $202
million from the sale of certain businesses. Consolidated net income for the
same period last year was $288 million, or $3.89 per share ($1.30 per share
post-split).
REVENUES
- --------
Consolidated revenues for the first quarter of 1998 were $5.4 billion, compared
with $4.6 billion for the same period last year.
ASSETS/SHAREHOLDERS' EQUITY
- ---------------------------
Assets at March 31, 1998 were $111 billion, compared with $108 billion at
December 31, 1997. Shareholders' equity was $8.3 billion, or $115.73 per share
($38.58 per share post-split), at March 31, 1998, compared with $7.9 billion, or
$109.66 per share ($36.55 per share post-split), at December 31, 1997.
<PAGE>
- 5 -
SHARE REPURCHASE
- ----------------
CIGNA's share repurchase authority was increased by $750 million at the April
Board of Directors meeting, which brings total available share repurchase
authority to approximately $1 billion at April 30, 1998. During 1998, CIGNA has
repurchased 797,000 shares of its common stock for $154 million (588,000 shares
repurchased in the first quarter for $111 million).
Quarterly earnings are available on CIGNA's home page on the Internet
(http://www.cigna.com).
<PAGE>
CIGNA CORPORATION
COMPARATIVE SUMMARY OF FINANCIAL RESULTS
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
[CIGNA LOGO]
==================================================================================================================================
Three Months Ended
March 31,
1998 1997
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
REVENUES
Premiums and fees $ 3,901 $ 3,388
Net investment income 937 1,053
Other revenues 198 160
Gain on sale of businesses (1) 316 -
Realized investment gains 59 44
- ----------------------------------------------------------------------------------------------------------------------------------
Total $ 5,411 $ 4,645
- ------------------------------------------------------------------------------------------------------============================
OPERATING INCOME (LOSS) BY SEGMENT (1)(2)
Employee Life and Health Benefits:
Indemnity operations $ 69 $ 58
HMO operations 62 59
---------- -----------
Total Employee Life and Health Benefits 131 117
Employee Retirement and Savings Benefits 56 54
Individual Financial Services 243 47
Property and Casualty:
International 31 33
Domestic 19 23
---------- -----------
Ongoing operations 50 56
Run-off operations - 1
---------- -----------
Total Property and Casualty 50 57
Other Operations (23) (15)
- ----------------------------------------------------------------------------------------------------------------------------------
Total $ 457 $ 260
- ------------------------------------------------------------------------------------------------------============================
NET INCOME (LOSS) BY SEGMENT (1)
Employee Life and Health Benefits:
Indemnity operations $ 87 $ 62
HMO operations 62 59
---------- -----------
Total Employee Life and Health Benefits 149 121
Employee Retirement and Savings Benefits 59 62
Individual Financial Services 248 55
Property and Casualty:
International 36 41
Domestic 19 22
---------- -----------
Ongoing operations 55 63
Run-off operations 7 2
---------- -----------
Total Property and Casualty 62 65
Other Operations (23) (15)
- ----------------------------------------------------------------------------------------------------------------------------------
Total $ 495 $ 288
- ------------------------------------------------------------------------------------------------------============================
DILUTED EARNINGS PER SHARE PRE-SPLIT (3):
Operating income $ 6.30 $ 3.51
After-tax realized investment gains 0.52 0.38
- ----------------------------------------------------------------------------------------------------------------------------------
Net income $ 6.82 $ 3.89
- ------------------------------------------------------------------------------------------------------============================
Weighted average shares (in thousands) 72,585 74,105
- ------------------------------------------------------------------------------------------------------============================
DILUTED EARNINGS PER SHARE POST-SPLIT (3):
Operating income $ 2.10 $ 1.17
After-tax realized investment gains 0.17 0.13
- ----------------------------------------------------------------------------------------------------------------------------------
Net income $ 2.27 $ 1.30
- ------------------------------------------------------------------------------------------------------============================
Weighted average shares (in thousands) 217,755 222,315
- ------------------------------------------------------------------------------------------------------============================
SHAREHOLDERS' EQUITY at March 31 $ 8,325 $ 7,117
- ------------------------------------------------------------------------------------------------------============================
SHAREHOLDERS' EQUITY PER SHARE at March 31 (Pre-Split) (3): $ 115.73 $ 96.18
- ------------------------------------------------------------------------------------------------------============================
SHAREHOLDERS' EQUITY PER SHARE at March 31 (Post-Split) (3): $ 38.58 $ 32.06
- ------------------------------------------------------------------------------------------------------============================
<FN>
(1) Reflects the pre-tax gain of $316 million ($202 million after-tax)
recognized as of January 1, 1998 in connection with the sale of the individual
life insurance and annuity businesses.
(2) Operating income (loss) is defined as net income (loss) excluding after-tax
realized investment results.
(3) On April 22, 1998, CIGNA's shareholders approved a three-for-one common
stock split.
</FN>
</TABLE>
