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, 1998
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CIGNA Corporation
(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)
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Item 5. Other Events.
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A. On July 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
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 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: July 31, 1998 By:/s/ Gary A. Swords
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Gary A. Swords
Vice President and
Chief Accounting Officer
<PAGE>
Index to Exhibits
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Number Description Method of Filing
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20 CIGNA Corporation Filed herewith
news release dated
July 30, 1998
NEWS RELEASE Exhibit 20 [CIGNA LOGO]
For Release: Immediate
Contact: Albert D. Ciavardelli, Investor Relations - (215) 761-6128
Michael J. Monroe, Media Relations - (215) 761-6133
CIGNA REPORTS SECOND QUARTER 1998 RESULTS
OPERATING EARNINGS PER SHARE UP 5% ON SOLID RESULTS FROM
EMPLOYEE LIFE & HEALTH AND RETIREMENT SAVINGS BENEFITS SEGMENTS
PHILADELPHIA, July 30, 1998 -- CIGNA Corporation (NYSE:CI) today reported second
quarter 1998 operating income* of $276 million, or $1.27 per share, compared
with operating income of $270 million, or $1.21 per share, for the same period
last year.
For the first half of 1998, operating income was $531 million, or $2.45 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 $733 million, or $3.38 per share. For the first
half of 1997, operating income was $530 million, or $2.38 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.
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- 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 $142 million in the second quarter of 1998, compared
with $126 million for the same period last year. For the first half of 1998,
operating income was $273 million, compared with $243 million for the same
period last year.
HMO medical membership at June 30, 1998 was 6.4 million members, an increase of
518,000 members, or 9 percent, from December 31, 1997, and up 12 percent over
second quarter 1997 on a pro forma basis.
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 $56 million in the second quarter of 1998,
compared with $53 million for the same period last year. For the first half of
1998 and 1997, operating income was $112 million and $107 million, respectively.
Assets under management at June 30, 1998 were $48.3 billion, an increase of 10
percent from $43.9 billion as of June 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 results of CIGNA's corporate-owned life insurance, and life,
accident and health reinsurance businesses, as well as the recognition of a
portion of the deferred gain from the sale of the individual life insurance and
annuity businesses. Operating income for the second quarter of 1998 was $37
million, including $16 million of deferred gain from the sale, compared with
operating income of $48 million for the second quarter of 1997.
The segment's operating income for the first half of 1998, excluding the $202
million gain on the sale that was recognized at closing, was $78 million,
compared with $95 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 $55 million and a GAAP combined ratio after policyholders'
dividends ("combined ratio") of 100 for the second quarter of 1998. This
compares with operating income of $59 million and a combined ratio of 100 for
the same period last year. For the first half of 1998, operating income was $105
million, compared with $115 million for the first half of 1997.
<PAGE>
- 4 -
Domestic had operating income of $27 million and a combined ratio of 103 for the
second quarter of 1998. This compares with operating income of $23 million and a
combined ratio of 106 for the second quarter of 1997. International had
operating income of $28 million and a combined ratio of 97 for the second
quarter of 1998. This compares with operating income of $36 million and a
combined ratio of 94 for the second quarter of 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 $14 million in the second quarter of 1998, compared with an
operating loss of $16 million for the same period last year. For the first half
of 1998, operating losses totaled $37 million, compared with $31 million in the
same period of 1997.
NET INCOME
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Consolidated net income for the second quarter of 1998 was $308 million, or
$1.42 per share, compared with $279 million, or $1.25 per share, for the same
period last year. Consolidated net income for the first half of 1998 was $803
million, or $3.70 per share, including an after-tax gain of $202 million from
the sale of certain businesses. Consolidated net income for the same period last
year was $567 million, or $2.55 per share.
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REVENUES
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Consolidated revenues for the second quarter of 1998 were $5.3 billion, compared
with $4.7 billion for the same period last year. For the first half of 1998,
revenues were $10.7 billion, compared with $9.4 billion for the same period last
year.
ASSETS/SHAREHOLDERS' EQUITY
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Assets at June 30, 1998 were $111 billion, compared with $108 billion at
December 31, 1997. Shareholders' equity was $8.3 billion, or $39.29 per share,
at June 30, 1998, compared with $7.9 billion, or $36.55 per share, at December
31, 1997.
SHARE REPURCHASE
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During the second quarter of 1998, CIGNA repurchased 3,745,100 shares of its
common stock for $260 million, which is in addition to the 1,763,400 shares
repurchased in the first quarter for $111 million. In 1998, through July 30,
CIGNA has repurchased a total of 6,343,500 shares for $432 million.
# # # #
Quarterly earnings are available on CIGNA's home page on the Internet
(http://www.cigna.com).
[N:\CORPFINA\2Q98.REL]
<PAGE>
CIGNA CORPORATION
COMPARATIVE SUMMARY OF FINANCIAL RESULTS
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
[CIGNA LOGO]
==================================================================================================================================
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
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<S> <C> <C> <C> <C>
REVENUES
Premiums and fees $ 4,115 $ 3,482 $ 8,016 $ 6,870
Net investment income 942 1,062 1,879 2,115
Other revenues 217 163 415 323
Gain on sale of businesses (1) - - 316 -
Realized investment gains 47 12 106 56
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Total $ 5,321 $ 4,719 $ 10,732 $ 9,364
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OPERATING INCOME (LOSS) BY SEGMENT (1)(2)
Employee Life and Health Benefits:
Indemnity operations $ 72 $ 68 $ 141 $ 126
HMO operations 70 58 132 117
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Total Employee Life and Health Benefits 142 126 273 243
Employee Retirement and Savings Benefits 56 53 112 107
Individual Financial Services 37 48 280 95
Property and Casualty:
International 28 36 59 69
Domestic 27 23 46 46
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Ongoing operations 55 59 105 115
Run-off operations - - - 1
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Total Property and Casualty 55 59 105 116
Other Operations (14) (16) (37) (31)
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Total $ 276 $ 270 $ 733 $ 530
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NET INCOME (LOSS) BY SEGMENT (1)
Employee Life and Health Benefits:
Indemnity operations $ 90 $ 70 $ 177 $ 132
HMO operations 70 58 132 117
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Total Employee Life and Health Benefits 160 128 309 249
Employee Retirement and Savings Benefits 64 54 123 116
Individual Financial Services 37 47 285 102
Property and Casualty:
International 20 42 56 83
Domestic 32 25 51 47
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Ongoing operations 52 67 107 130
Run-off operations 4 (1) 11 1
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Total Property and Casualty 56 66 118 131
Other Operations (9) (16) (32) (31)
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Total $ 308 $ 279 $ 803 $ 567
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DILUTED EARNINGS PER SHARE:
Operating income $ 1.27 $ 1.21 $ 3.38 $ 2.38
After-tax realized investment gains 0.15 0.04 0.32 0.17
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Net income $ 1.42 $ 1.25 $ 3.70 $ 2.55
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Weighted average shares (in thousands) 216,546 222,773 217,145 222,528
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SHAREHOLDERS' EQUITY at June 30 $ 8,340 $ 7,548
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SHAREHOLDERS' EQUITY PER SHARE at June 30: $ 39.29 $ 33.99
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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>
