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) November 2, 1998
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CIGNA Corporation
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(Exact name of registrant as specified in its charter)
Delaware 1-8323 06-1059331
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
One Liberty Place, 1650 Market Street
Philadelphia, Pennsylvania 19192-1550
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(215) 761-1000
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Not Applicable
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(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
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A. On November 2, 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
Oral statements made by individuals authorized to speak on behalf of
CIGNA Corporation ("CIGNA") that do not deal 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 and Latin American economies.
Item 7. Financial Statements and Exhibits.
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(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: November 3, 1998 By:/s/ Carol J. Ward
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Carol J. Ward
Corporate Secretary
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Index to Exhibits
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Number Description Method of Filing
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20 CIGNA Corporation Filed herewith
news release dated
November 2, 1998
EXHIBIT 20
[CIGNA LOGO]
NEWS RELEASE
For Release: Immediate
Contact: Ted Detrick, Financial Relations - (215) 761-6130
Michael J. Monroe, Media Relations - (215) 761-6133
CIGNA REPORTS THIRD QUARTER 1998 RESULTS
EMPLOYEE LIFE & HEALTH AND RETIREMENT SAVINGS POST STRONG RESULTS;
PROPERTY AND CASUALTY REFLECTS HURRICANE LOSSES
PHILADELPHIA, November 2, 1998 -- CIGNA Corporation (NYSE: CI) today reported
third quarter 1998 operating income* of $241 million, or $1.14 per share,
compared with operating income of $262 million, or $1.17 per share, for the same
period last year. The third quarter of 1998 includes $44 million of after-tax
catastrophe losses, $42 million of which were associated with damages from
Hurricane Georges, principally in Puerto Rico.
For the nine months of 1998, operating income was $772 million, or $3.59 per
share, excluding an after-tax gain of $202 million from the first quarter sale
of CIGNA's individual life insurance and annuity businesses. Including the gain
on sale, operating income was $974 million, or $4.53 per share. For the nine
months of 1997, operating income was $792 million, or $3.55 per share.
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* 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.
<PAGE>
-2-
SEGMENT RESULTS:
Employee Life and Health Benefits
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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 $159 million in the third quarter of 1998, up 24
percent, compared with $128 million for the same period last year. For the nine
months of 1998, operating income was $432 million, compared with $371 million
for the same period last year.
HMO medical membership at September 30, 1998 was 6.5 million members, an
increase of 593,000 members, or 10 percent, from December 31, 1997, and up 11
percent over third quarter 1997.
Employee Retirement and Savings Benefits
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This segment, which operates in the defined contribution and defined benefit
markets, had operating income of $59 million in the third quarter of 1998,
compared with $53 million for the same period last year. For the nine months of
1998 and 1997, operating income was $171 million and $160 million, respectively.
Assets under management at September 30, 1998 were $46.9 billion, an increase of
3 percent from $45.5 billion as of September 30, 1997.
<PAGE>
-3-
Individual Financial Services
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CIGNA sold its individual life insurance and annuity businesses effective
January 1, 1998 to Lincoln National Corporation. Following the sale, the segment
includes the recognition of a portion of the deferred gain from the sale as well
as the results of CIGNA's corporate-owned life insurance, and life, accident and
health reinsurance businesses. Operating income for the third quarter of 1998
was $40 million, including $17 million of deferred gain from the sale, compared
with operating income of $51 million for the third quarter of 1997.
The segment's operating income for the nine months of 1998, excluding the $202
million gain on the sale that was recognized at closing, was $118 million,
compared with $146 million for the same period last year.
Property and Casualty
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Ongoing operations (Domestic and International operations combined) had
operating income of $13 million and a GAAP combined ratio after policyholders'
dividends ("combined ratio") of 109 for the third quarter of 1998. These results
include after-tax catastrophe losses of $44 million, primarily associated with
Hurricane Georges ($42 million). This compares with operating income of $59
million and a combined ratio of 100 for the same period last year. For the nine
months of 1998, operating income was $118 million, compared with $174 million
for the nine months of 1997.
<PAGE>
-4-
Domestic had operating income of $26 million for the third quarters of 1998 and
1997. The combined ratio was 106 for the third quarter of 1998, compared with a
combined ratio of 105 for the third quarter of 1997. International had an
operating loss of $13 million and a combined ratio of 112 for the third quarter
of 1998. This compares with operating income of $33 million and a combined ratio
of 95 for the third quarter of 1997.
The $44 million of after-tax catastrophe losses for the third quarter of 1998
compares with $1 million for the same period last year. After-tax catastrophe
losses for the nine months of 1998 were $63 million, compared with $10 million
for 1997.
Other
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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 $30 million in the third quarter of 1998, compared with an
operating loss of $29 million for the same period last year. For the nine months
of 1998, operating losses totaled $67 million, compared with $60 million in the
same period of 1997.
NET INCOME
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Consolidated net income for the third quarter of 1998 was $251 million, or $1.19
per share, compared with $279 million, or $1.25 per share, for the same period
last year. Consolidated net income for the nine months of 1998 was $1.1 billion,
or $4.90 per share, including an after-tax gain
<PAGE>
-5-
of $202 million from the sale of certain businesses. Consolidated net income for
the same period last year was $846 million, or $3.79 per share.
REVENUES
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Consolidated revenues for the third quarters of 1998 and 1997 were $5.2 billion.
For the nine months of 1998, revenues were $16.0 billion, compared with $14.5
billion for the same period last year.
ASSETS/SHAREHOLDERS'EQUITY
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Assets at September 30, 1998 were $109 billion, compared with $108 billion at
December 31, 1997. Shareholders' equity was $8.2 billion, or $39.50 per share,
at September 30, 1998, compared with $7.9 billion, or $36.55 per share, at
December 31, 1997.
SHARE REPURCHASE
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During the third quarter of 1998, CIGNA repurchased 5,893,400 shares of its
common stock for $385 million, which is in addition to the 5,508,500 shares
repurchased in the first half of 1998 for $371 million. In 1998, through October
30, CIGNA has repurchased a total of 12,400,600 shares for $822 million.
# # # #
Quarterly earnings are available on CIGNA's home page on the Internet
(http://www.cigna.com).
<PAGE>
<TABLE>
<CAPTION>
CIGNA CORPORATION [CIGNA LOGO}
COMPARATIVE SUMMARY OF FINANCIAL RESULTS
(Dollars in millions, except per share amounts)
=============================================================================================================================
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
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<S> <C> <C> <C> <C>
REVENUES
Premiums and fees $ 4,093 $ 3,925 $ 12,109 $ 10,795
Net investment income 911 1,057 2,790 3,172
Other revenues 205 175 620 498
Gain on sale of businesses (1) - - 316 -
Realized investment gains 17 25 123 81
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Total $ 5,226 $ 5,182 $ 15,958 $ 14,546
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OPERATING INCOME (LOSS) BY SEGMENT (1)(2)
Employee Life and Health Benefits:
Indemnity operations $ 77 $ 76 $ 218 $ 202
HMO operations 82 52 214 169
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Total Employee Life and Health Benefits 159 128 432 371
Employee Retirement and Savings Benefits 59 53 171 160
Individual Financial Services 40 51 320 146
Property and Casualty:
International (13) 33 46 102
Domestic 26 26 72 72
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Ongoing operations 13 59 118 174
Run-off operations - - - 1
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Total Property and Casualty 13 59 118 175
Other Operations (30) (29) (67) (60)
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Total $ 241 $ 262 $ 974 $ 792
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NET INCOME (LOSS) BY SEGMENT (1)
Employee Life and Health Benefits:
Indemnity operations $ 96 $ 72 $ 273 $ 204
HMO operations 82 52 214 169
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Total Employee Life and Health Benefits 178 124 487 373
Employee Retirement and Savings Benefits 64 51 187 167
Individual Financial Services 43 49 328 151
Property and Casualty:
International (30) 44 26 127
Domestic 25 39 76 86
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Ongoing operations (5) 83 102 213
Run-off operations 1 (1) 12 -
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Total Property and Casualty (4) 82 114 213
Other Operations (30) (27) (62) (58)
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Total $ 251 $ 279 $ 1,054 $ 846
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DILUTED EARNINGS PER SHARE:
Operating income $ 1.14 $ 1.17 $ 4.53 $ 3.55
After-tax realized investment gains 0.05 0.08 0.37 0.24
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Net income $ 1.19 $ 1.25 $ 4.90 $ 3.79
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Weighted average shares (in thousands) 211,512 223,572 215,247 223,175
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SHAREHOLDERS' EQUITY at September 30: $ 8,156 $ 7,991
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SHAREHOLDERS' EQUITY PER SHARE at September 30: $ 39.50 $ 35.97
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<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.
</FN>
</TABLE>
